A recovery for the manufacturing sector may be at hand, according to the Manufacturers Alliance/MAPI. MAPI's December 2009 composite index rose to 57% from 38% in September, the highest level since March 2008, and the first time in six quarters it rose above 50%.
The current reading indicates overall manufacturing activity is expected to grow in the next three to six months.
"Since many of the indexes are based on comparisons with activity in the fourth quarter of 2008, during which manufacturing sector activity had taken a sharp downward turn, the improvement in the composite index is not, by itself, evidence of a meaningful recovery," said Donald. A. Norman, MAPI economist. "The extent to which the individual indexes improved, however, along with the significant increases in the forward looking annual orders and investment indexes, provide the strongest indication to date that the manufacturing sector is on the upswing."
The quarterly orders index rose to 42% from 11% in the previous survey. The non-U.S. prospective shipments index rose to 64% from 33%, while the U.S. prospective shipments index rose to 50% from 30%.
The backlogs index improved to 36% from 16% in September. An increase in backlogs is usually a sign that new orders exceed shipments.
The U.S. investment index was at 66%, up from 47%. The non-U.S. investment index rose to 68% from 52%, indicating an expected increase in capital spending outside the U.S.
The R&D index improved to 66% from 49%. The annual orders index rose to 80% from 66%, and the profit margin index increased to 38%from 22%.
The inventory index rose to 8% from a record low of 7%, while the capacity utilization index fell to 7% from 8.4% in the previous survey.
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