Manufacturing Growth Declines Sharply As Manufacturers Alliance/MAPI Index Drops to Lowest Point Since 1972

Apr 12, 2001, 01:00 ET from Manufacturers Alliance/MAPI

    ARLINGTON, Va., April 12 /PRNewswire/ -- A precipitous overall drop in the
 four factors that comprise the Manufacturers Alliance/MAPI Business Outlook
 Index has reduced the Index to its lowest point in 29 years, or since its
 inception in 1972.
     The Business Outlook Index, an accurate gauge of future business activity,
 dropped 16 percentage points, from 50 to 34 percent, in first-quarter 2001.
 Fifty percent is the transition point between growth and decline.  The survey
 reflects the views of nearly 50 senior financial executives representing a
 broad range of manufacturing industries on current and future business
 conditions.
     "At 34 percent, the Index is signaling that manufacturing output is
 expected to continue declining over the next quarter," said Don Norman,
 Manufacturers Alliance/MAPI economist and survey coordinator.
     The previous low for the Index was 39 percent, a level reached in
 September 1980, and again in September 1982.  In addition, the 16 percentage
 point drop is the largest quarterly decline since the Index was first compiled
 on a quarterly basis starting in September 1991.  Prior to that, it was
 calculated on a semiannual basis.
     The four factors that comprise the Index, a weighted sum of shipments,
 backlogs, inventories, and profit margins, each declined from the fourth
 quarter survey which was conducted in December 2000.
     The shipments index dropped from 58 percent in the fourth quarter of 2000
 to 36 percent in the first quarter of 2001, while the backlogs index declined
 by 7 percentage points, from 54 to 47 percent according to the March 2001
 survey.  Because the shipments index is below the 50 percent level, shipments
 are expected to decline over the next quarter.  Less rapid accumulation of
 backlog orders usually occurs when shipments exceed the growth rate in new
 orders.
     The inventory index was 67 percent.  Although high, it did not increase
 over the past quarter, suggesting that growth in inventories may have peaked.
 That index is still well above the 57 percent in the March 2000 survey.  The
 profit margin index dropped alarmingly, from 46 percent to 19 percent.  Many
 industries are being squeezed by sharply higher energy prices, higher
 debt-financing costs, and weakness in some sectors of the economy like
 transportation equipment.
     The survey also found that many companies have revised their capital
 investment plans downward.  In the December 2000 survey, the results were
 divided evenly, with 35 percent indicating that capital spending would rise
 and 35 percent saying it would fall.  In the latest survey, just 19 percent of
 the respondents expect their capital spending will be higher while 44 percent
 believe it will decline.  The current investment index is just 38 percent,
 down from 50 percent in December.
     Manufacturing activity, as measured by the Federal Reserve Board's index
 of durable industrial production, fell by an estimated 2 percent in the first
 quarter of 2001.
     To obtain a copy of the report, contact the Manufacturers Alliance/MAPI:
 1525 Wilson Boulevard, Arlington, VA  22209, 703-841-9000, 703-841-9514 (fax).
     The Manufacturers Alliance/MAPI is a policy research organization with
 approximately 450 member companies including leading producers in heavy
 industry, automotive, electronics, precision instruments, telecommunications,
 computers, chemicals, oil and gas, aerospace, and other high-technology
 industries.
     Website: http://www.mapi.net
 
 

SOURCE Manufacturers Alliance/MAPI
    ARLINGTON, Va., April 12 /PRNewswire/ -- A precipitous overall drop in the
 four factors that comprise the Manufacturers Alliance/MAPI Business Outlook
 Index has reduced the Index to its lowest point in 29 years, or since its
 inception in 1972.
     The Business Outlook Index, an accurate gauge of future business activity,
 dropped 16 percentage points, from 50 to 34 percent, in first-quarter 2001.
 Fifty percent is the transition point between growth and decline.  The survey
 reflects the views of nearly 50 senior financial executives representing a
 broad range of manufacturing industries on current and future business
 conditions.
     "At 34 percent, the Index is signaling that manufacturing output is
 expected to continue declining over the next quarter," said Don Norman,
 Manufacturers Alliance/MAPI economist and survey coordinator.
     The previous low for the Index was 39 percent, a level reached in
 September 1980, and again in September 1982.  In addition, the 16 percentage
 point drop is the largest quarterly decline since the Index was first compiled
 on a quarterly basis starting in September 1991.  Prior to that, it was
 calculated on a semiannual basis.
     The four factors that comprise the Index, a weighted sum of shipments,
 backlogs, inventories, and profit margins, each declined from the fourth
 quarter survey which was conducted in December 2000.
     The shipments index dropped from 58 percent in the fourth quarter of 2000
 to 36 percent in the first quarter of 2001, while the backlogs index declined
 by 7 percentage points, from 54 to 47 percent according to the March 2001
 survey.  Because the shipments index is below the 50 percent level, shipments
 are expected to decline over the next quarter.  Less rapid accumulation of
 backlog orders usually occurs when shipments exceed the growth rate in new
 orders.
     The inventory index was 67 percent.  Although high, it did not increase
 over the past quarter, suggesting that growth in inventories may have peaked.
 That index is still well above the 57 percent in the March 2000 survey.  The
 profit margin index dropped alarmingly, from 46 percent to 19 percent.  Many
 industries are being squeezed by sharply higher energy prices, higher
 debt-financing costs, and weakness in some sectors of the economy like
 transportation equipment.
     The survey also found that many companies have revised their capital
 investment plans downward.  In the December 2000 survey, the results were
 divided evenly, with 35 percent indicating that capital spending would rise
 and 35 percent saying it would fall.  In the latest survey, just 19 percent of
 the respondents expect their capital spending will be higher while 44 percent
 believe it will decline.  The current investment index is just 38 percent,
 down from 50 percent in December.
     Manufacturing activity, as measured by the Federal Reserve Board's index
 of durable industrial production, fell by an estimated 2 percent in the first
 quarter of 2001.
     To obtain a copy of the report, contact the Manufacturers Alliance/MAPI:
 1525 Wilson Boulevard, Arlington, VA  22209, 703-841-9000, 703-841-9514 (fax).
     The Manufacturers Alliance/MAPI is a policy research organization with
 approximately 450 member companies including leading producers in heavy
 industry, automotive, electronics, precision instruments, telecommunications,
 computers, chemicals, oil and gas, aerospace, and other high-technology
 industries.
     Website: http://www.mapi.net
 
 SOURCE  Manufacturers Alliance/MAPI