Manufacturing by the Numbers = Dichotomy

If you're confused by the latest figures from the various groups that produce monthly reports on the manufacturing economy, you're not alone. One day we're hearing of all the job opportunities that exist in manufacturing - positions that go wanting for people to fill them so manufacturing companies can meet demand in a more timely manner and grow their businesses - and the next day we hear that non-farm payroll remained unchanged for the month of August - not one company added a new job. The unemployment rate remains steady at 9.1%, and 14 million people are unemployed, according to the latest report from the Bureau of Labor Statistics.

However, the Institute for Supply Management continues to put its positive spin on things. The ISM's Manufacturing Report on Business shows that activity in the manufacturing sector expanded in August for the 25th consecutive month, albeit at a slightly slower rate, a decrease of 0.3% to 50.6% from July's index.

The Production Index registered 48.6%, indicating contraction for the first time since May 2009, when it registered 45%. Both the New Orders and Backlog of Orders Indexes moved up slightly from July, but both indexes are indicating contraction in August at slower rates than in July. Not great news by any stretch of the imagination.

In fact, if anything, it's lending more credibility to the fears that a "double-dip" recession is looming. That seems to have manufacturers facing the conundrum of hanging onto their profits and hunkering down, or hiring people, buying equipment and being bold about growth. It appears from the ISM's index that many are choosing the former.

"The overall sentiment is one of concern and caution over the domestic and international economic environment, which is affecting customers' confidence and willingness to place orders, at least in the short term," said Bradley J. Holcomb, CSPM, CPSD, and chair of the ISMs Manufacturing Business Survey Committee.

Of the 18 manufacturing industries the ISM surveys each month, 10 reported growth in August. Fabricated Metal Products ranked #5 in order of growth. Not in that list were Plastics & Rubber products, ranking #1 in industries reporting contraction. Given the fact that the mold manufacturers are generally very busy at this point, molders might be seeing an increase in molding work by end of the year, and moldmakers might experience a bit of a slowdown the first quarter of 2012.

Some comments from respondents to the ISM's survey include this one from the Fabricated Metal Products sector: "Domestic sales are showing small improvements. International sales are showing larger improvements."  A comment from a respondent in the Plastics & Rubber Products sector noted that "We continue to post solid numbers, but the situation seems tenuous."

The Machinery sector doesn't sound hopeful, with a respondent in that category noting, "Business is soft, confidence is down, and we are cutting inventory and expenses."

The only good news for molders and moldmakers seems to be in the commodities pricing. Commodities down in price for August were Cold Rolled Steel, Copper; Natural Gas, Plastics Products; Plastic Resins; Polyethylene Resin, Polypropylene Resin, and Steel."