Marquette’s manufacturing index shows significant decline in September
Company leaders taking conservative approach

By Katherine Michalets - Freeman Staff

Oct. 1, 2015

The Milwaukee-area PMI has been below 50 for the last six months. An index above 50 suggests the industry is growing, while a reading below 50 suggests it is constricting.
Source: Marquette University Institute for Supply Management

MILWAUKEE -The Marquette University Institute for Supply Management report showed a significant decline in the industry during September, illustrating a market that continues to constrict in southeastern Wisconsin and northern Illinois.

According to the report released Wednesday, the September index registered at 39.44, which is below the 50-level indicating negative territory for the sixth straight month. In August, the index was at 47.67 and in July was 47.12. Any number under 50 signifies a constricted market.

September report respondents said there were “no major issues of concern at this time” as well as “there has been slowing demand from customers as the end of fiscal year is approaching.”

Douglas A. Fisher, assistant professor and director of the Center for Supply Chain Management at Marquette University, said the decrease also surprised him, causing him to recheck all of the calculations.

“While unexpected, my ‘feelings’ are that companies were burned so badly in the 2008/09 recession that any sign of ‘softness’ produces a very conservative reaction,” Fisher wrote in an email Wednesday. “From a business management perspective, that is not all bad. From an ‘economic reporting standpoint’, it can produce unexpected numbers in any given month.”

The manufacturing index for September showed declines in new orders, employment, supplier deliveries, inventories and prices. The only two areas that increased were imports and customers’ inventories.

Respondents to the survey also said there have been increases in the number of orders, which has caused some companies to fall behind on meeting all of their orders, but others said the pending orders should be released soon.

Fisher pointed out the “inconsistent” comments with the survey.

“One month does not make a trend - so let’s see what October produces,” Fisher said.

The report also indicated the white collar employment is growing, while blue collar employment is declining. Retirees, according to the index, are not being replaced.

According to the report, there is no change in positive expectations in September compared to August regarding the terms of market conditions.

“Approximately 38.5 percent of respondents expect positive conditions, 38.5 percent expect conditions to remain the same and 23.1 percent of the respondents expect conditions to worsen within the next six months,” according to the report.