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MAPI Survey: Manufacturing Sector Index Slipped in Q2

July 13, 2012, 07:38 AM
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Topic: Manufacturing

The results of the quarterly Manufacturers Alliance for Productivity and Innovation (MAPI) Survey on the Business Outlook—June 2012 (EO-110) point to a period of deceleration for manufacturing, heretofore a strong pillar in the U.S. economic recovery.

The survey’s composite index is a leading indicator for the manufacturing sector. The June 2012 composite index fell to 61 from 65 in the March 2012 survey. Despite the decline—its eighth straight since reaching a record high of 81 in June 2010—the index remains well above the threshold of 50, the dividing line that separates contraction and expansion.

 “While the rate of decline was relatively slow from June 2011 through March 2012, the drop in the current quarter equals the decrease in the June 2011 survey, when it also fell by four points from its previous level,” said Donald A. Norman, Ph.D., MAPI Senior Economist and survey coordinator. “Unsurprisingly, the Non-U.S. Prospective Shipments and Non-U.S. Investment Indexes registered the sharpest declines, showing the effects of the Eurozone recession and the slowing growth in China.”

The Composite Business Outlook Index is a weighted sum of the Prospective U.S. Shipments, Backlog Orders, Inventory, and Profit Margin Indexes. In addition to the composite index, which reflects the views of 57 senior financial
executives representing a broad range of manufacturing industries, the survey includes 13 individual indexes that are split between current business conditions and forward looking prospects.

Each of the 13 indexes showed some softening, including the six current business conditions indexes. In contrast, four of the six current business condition indexes showed improvement in the March 2012 survey.

Read the full Manufacturers Alliance for Productivity and Innovation (MAPI) Survey.

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