Southeastern Wisconsin’s manufacturing sector saw a sharp drop in new orders in December but did manage a slight improvement in activity compared to November, according to the latest Marquette-ISM Report on Manufacturing.
The report’s Milwaukee-area PMI increased from 44.74 in November to 45.42 in December. However, the reading remained below 50, suggesting the manufacturing sector is contracting. A reading above 50 indicates growth.
One of the biggest shifts in December’s report came in the new orders measure, which dropped 16.8 points to 22.31. Inventories also increased 19.2 points to 64.97 and order backlogs dropped 11.7 points to 29.17.
The shifts all add up to signs of a slowdown in the region’s manufacturing sector. The Milwaukee-area PMI has now been less than 50 in five of the past six months. The six-month average dropped from 49.8 in November to 47.6 in December.
Respondents to the survey behind the numbers pointed to continuing issues on a number of fronts. Some noted inflation is still a major issue while others pointed to material shortages, although others commented that supply chains “are slowly improving.”
There was some relatively good news for the region’s economy as business outlook improved, although a plurality of respondents still expect conditions to be worse in six months.
In November, 70% of respondents said they expected business conditions to worsen over the next six months, a figure that declined to 45% in December. The percentage of respondents expecting improved conditions climbed from 10% to 18% over the past two months.
More than a third of respondents, 36%, expect conditions to remain the same, up from 20% in November.
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