We reported earlier on a few recent economic indicators suggesting the health of US manufacturing isn’t necessarily ER-bound. However, according to the Chicago Federal Reserve Bank, the Midwest manufacturing index did turn in a lower performance in March, mostly due to the automotive sector. The index, released by the Fed in Chicago, comes out monthly and measures manufacturing output for the five states that make up the seventh Federal Reserve district: Illinois, Indiana, Iowa, Michigan and Wisconsin. The index fell 0.7 percent from 108.4 in February.

The greatest concern is the “spread of the illness”. It shouldn’t come as a surprise to anyone that auto sales would be down. Anecdotal evidence from machine shops in Ohio suggests that the trucking industry (by production, not usage) is also down this year. But unlike the automotive industry, several machine shops expect an up-tick in orders from the large truck OEMs by the end of the year. Lumpy would be a good description for current economic conditions. Certain industries are feeling the impact more so than others. On a recent business trip, we met with a handful of machine shop owners and all reported strong order books.

–Lisa Reisman

A slew of economic data recently published paints a picture that’s more Rothko than Rembrandt. That picture is fuzzy, blurred, and somewhat confusing. Its interpretation is left to the viewer. But those in the metals industry know that economic conditions directly impact commodities. And so we start with a few tidbits of data that go beyond metal working and affect all manufacturing. That data relates to US productivity numbers. What do you need to know? Briefly, just the following:

Productivity increased by 2.2% in the first quarter, which was significantly higher than what economists had predicted, according to this article. That’s good, right? You bet, and the reason for that is productivity keeps labor costs in check — which in turn keeps inflationary pressures down. Of course, we metal folk know a lot about inflation, so any news to help on that front is welcome.

Another tidbit of good news … According to the Chicago Federal Reserve Bank on April 28, “regional steel output fell only by 0.2 percent after rising by 0.4 percent in February.” The machinery sector was also up by 0.6 percent and the resource sector (which includes food, paper, minerals, chemical and wood production) was also up. Although manufacturing in the Midwest certainly isn’t setting the world on fire, so far, so good.

–Lisa Reisman

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