Quality Magazine

Manufacturing on the Mend?

May 5, 2003
It seems that things are getting a little brighter for the manufacturing sector. According to the Commerce Department, orders to U.S. factories rose 2% in December 2001, higher than the 1.5% increase that most analysts predicted. The increase in orders for durable goods came after new orders fell by 6% in November.

Additional reason for cheer comes from the Institute for Supply Management (ISM), which reports that its index of business activity rose to 49.9 in January. That's up from 48.1 in December and is a sign that the rate of decline is continuing to slow in the manufacturing sector. An index above 50 indicates growth in manufacturing, while a figure below 50 shows a decline.

Closely tracked by economists, the ISM index is based on a survey of purchasing executives, and traditionally offers an early indication of the health of the manufacturing sector.

Manufacturing has been the hardest hit sector of the economy since the country slid into a recession in March 2001. Last year, factories eliminated 1.3 million jobs, or 7% of their work force. The Commerce Department reported that durable-goods orders fell by 13.2% in 2001, the worst showing since the current tracking system was implemented in 1992.

"While the manufacturing decline is now in its 18th month, some industries are starting to show significant signs of recovery as both new orders and new export orders are improving," says Nobert J. Ore, chairman of ISM.