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Manufacturing index continues to gain momentum

April 15, 2004

The long-awaited recovery in the U

The long-awaited recovery in the U.S. manufacturing sector is expected to continue to gain steam in the near term, according to the quarterly Manufacturers Alliance/MAPI Survey. The March 2004 index of 78 is the highest in the survey's 32-year history, surpassing the previous high of 77 in December 2003. A composite business index above 50 indicates that overall manufacturing activity is expected to increase over the next three months. The index measures the direction of change, not the absolute strength of activity in manufacturing.

Almost all components of the index maintained the high levels achieved in the previous quarter.

The orders index, which compares new orders for the first quarter of 2004 with the same quarter a year ago, rose from 89% in December to 90% in March. The prospective shipments index fell slightly from 91% (second quarter 2003) to 90%. The backlogs index rose from 80% in December to 85% in March, and the export index increased from 72% to 73% during the same course of time. The profit margin index improved from 66% to 73%. The last time it reached this level was in June 1995. The inventory index rose from 44% to 46%. Since inventories continue to be lean, most analysts expect production will expand to handle growing orders as well as to replenish and maintain inventories.