Manufacturing Growth Stalled at Year's End

Staff -- graphic arts online, 1/1/2001

Although service and retail businesses continued to do well at the end of 2000, the nation's manufacturing sector was having an increasingly rough go of it. Consumer demand was expected to be more subdued this year. There was general caution in the business community about inventory building in anticipation of future demand. Consequently, the volume of new orders placed with manufacturers waned during the fall and early winter of last year.

The National Association of Purchasing Management's (NAPM) latest "Report On Business" showed that economic activity in the nation's manufacturing sector declined for the fourth consecutive month during November, following 18 months of expansion.

The NAPM Purchasing Managers' Index (PMI) was at 47.7 in November 2000, 4.1 percentage points lower than in July, and well below the break-even point that separates growth from contraction (a PMI reading above 50 indicates that the manufacturing sector is expanding).

The PMI production component stood at 49.6 during November, with only seven of the 20 distinct manufacturing sectors surveyed indicating that output had expanded between October and November. New orders failed to grow for the fifth consecutive month during November. Further, after 20 consecutive months of growth, export orders declined for two straight months, raising concerns that the combination of a strong dollar and slowing economic growth overseas will make it tougher for U.S. manufacturers to make significant inroads into foreign markets.