Add another sign of manufacturing vitality to the growing evidence that the economy is on the mend. A quarterly survey conducted by the Manufacturers Alliance/MAPI shows that though orders and shipments are likely to remain low through the remainder of the year, incremental increases should appear in the fourth quarter and into 2010.
More importantly, the composite index for the industrial sector is at its highest level in a year. The composite index for the industrial sector rose to 38 in September. Though by no means an indication that manufacturers are out of the woods yet — 50 is the demarcation point between growth and contraction — it is a significant rise from the near-historic low of 24 reported in June and is a good metric for the direction of change, the Manufacturing Alliance said.
The September Manufacturers Alliance/MAPI Survey on the Business Outlook, released this week, is based on a poll of 61 senior financial executives from a range of industry segments. While a variety of measurements are used, including R&D spending and investments, the business outlook index is primarily a weighted sum of the shipments, backlogs, inventories, and profit margin indices.
The index of prospective U.S. shipments rebounded from 4% in June 2009 to 30% in September. The export orders index increased to 19% in September from 11% in June.