National report suggests manufacturing sector improvement

On Monday the Institute for Supply Management reported a continued increase in a national index that measures U.S. manufacturing activity — potentially good news for a Fort Smith region that has suffered big job losses in its manufacturing sector.

The July overall manufacturing index was 48.9%. A number above 50 indicates growth.

“The decline in manufacturing was slower in July when compared to June, as the more leading components of the PMI — the New Orders and Production Indexes — rose significantly above 50 percent, thus setting an expectation for future growth in the sector,” Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, said in a statement.

Ore said employment and inventory indices continue to contract, but the rate is slowing and the trend is moving in the right direction. Ore also said the New Export Orders Index shows growth following nine consecutive months of decline, which suggests the global manufacturing sector may also be improving.

“Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue,” Ore said.

The six industry sectors reporting growth in July are: Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Transportation Equipment; and Chemical Products. The 10 industry sectors reporting contraction in July are: Machinery; Plastics & Rubber Products; Wood Products; Textile Mills; Miscellaneous Manufacturing; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Primary Metals.

Another good sign was that the institute’s New Orders Index registered 55.3% in July, 6.1 percentage points higher than the 49.2% registered in June. New orders have grown in two of the last three months. The nine industries reporting growth in new orders in July are: Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Printing & Related Support Activities; Chemical Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products; and Computer & Electronic Products.

Nine consecutive months of manufacturing employment decline helped push the Fort Smith metro unemployment rate to 7.8% in June — almost three percentage points higher than the June 2008 rate. Manufacturing employment in the Fort Smith metro area has dipped 10.3% in the past 12 months. Regional manufacturing jobs totaled an estimated 22,600 in June, down from 25,200 in June 2008. The annual average manufacturing employment in the Fort Smith area fell from 31,700 in 1999 to 25,000 in 2008, a decline of more than 21%.

12 months Manufacturing Index
July 2009: 48.9
June 2009: 44.8
May 2009: 42.8
April 2009: 40.1
March 2009: 36.3
February 2009: 35.8
January 2009: 35.6
December 2008: 32.9
November 2008: 36.6
October 2008: 38.7
September 2008: 43.4
August 2008: 49.3