Manufacturing activity in southeastern Wisconsin reached its highest level in more than two years in January with the Milwaukee-area PMI nearly reaching 60.
The Marquette-ISM Report on Manufacturing put the index at 59.81, the highest level since November of 2014, although the report was not produced for five months in 2016. Any reading above 50 indicates growth in the region’s manufacturing sector.
The improvement was across the board as nearly every component of the report moved in a positive direction. New orders, production, backlog, prices and exports were all up. Employment, up from 43.45 to 58.6, inventories, up from 36.84 to 50 and imports, up from 46.15 to 62.50, were among the biggest movers. Supplier deliveries were slowing and customer inventories were declining.
Respondents were generally optimistic about the industry, with several noting the positive sentiment had increased in recent months on hopes for decreased regulation, lower corporate taxes and increased infrastructure spending.
One respondent noted the business was extremely busy and it would be difficult to keep up with demand.
There were some signs of caution through as respondents noted increases in prices, particularly for corrugated products from China and suppliers extending lead times in general because of material shortages.
A number of respondents also pointed to labor availability as the greatest supply chain issue, particularly in professional and technical positions. The report’s employment index for blue collar work increased from 51.6 to 55.4 and the white collar index went from 46.2 to 55.4.
Lead times increased across the board with the average commitment lead time going from 37 days to 77 days for capital expenditures, increasing from 16 to 33 days for production materials and jumping from 7 to 20 days for maintenance, repair and operating supplies.
The six-month business outlook also improved with the diffusion index moving from 71.1 percent to 74.19 percent, including 58.07 percent who expect positive conditions.
The Marquette-ISM Report on Manufacturing was suspended from May through September due to a lack of participation.
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