Industrial production moves slowly in the right direction

The September 2009 report from the Manufacturers Alliance/MAPI showed that the composite index rose to 38 from a near-historic low of 24 in the June 2009 report. It also represents the highest level in a year, or since an index of 38 was recorded in September 2008. At 38, however, the index still indicates that overall manufacturing activity is expected to contract over the next three to six months, relative to the levels of one year ago when the economy was entering severe recession.

Industrial production rose 0.7%in September.

The September 2009 index marks the fifth consecutive quarterly reading below 50. An index below 50 indicates a contraction, while an index above 50 indicates an expansion.



“U.S. manufacturers posted solid gains in September, capping a strong third quarter. Gains were led by primary metals, autos, aerospace, and chemicals,” said Thomas J. Duesterberg, president and CEO of Manufacturers Alliance/MAPI, regarding the industrial production report. “The inventory cycle has further to run, and this should sustain growth in the fourth quarter. But capacity utilization remains well below historical levels, and final demand for finished goods and capital equipment remains subdued. We need support from more robust investment in order to have confidence in stronger and more sustainable growth in 2010.”



The capacity utilization index, based on the percentage of firms operating above 85% of capacity, improved slightly, rising from 8.1% three months ago to 8.4% in the current survey, said the Manufacturers Alliance/MAPI report. The profit margin index increased to 22% in September compared to 18% in the June Report, snapping a string of seven straight quarters of decline. —Clare Goldsberry