Manufacturing Activity January 2016 Hello, this is Don Norman, Director of Economic Studies at the MAPI Foundation, a research affiliate of MAPI. With slowing growth in China and the implosion of stock prices there, the dramatic fall in the price of oil, and recent volatility in U.S. equity markets, January is coming in like a lion. Repeating the pattern observed in recent years, the first quarter will be challenging for U.S. manufacturers. One might say that what is happening bears watching. Or, one could say that the bears are watching what is happening. Presented by: Don Norman, Ph.D. Director of Economic Studies danorman@mapi.net

The PMI Survey Declines Again Purchasing Managers Index PMI By Component Industry Percent1 Dec. Nov. Change PMI 48.2 48.6 -0.4 Orders 49.2 48.9 +0.3 Production 49.8 +0.6 Employment 48.1 51.3 -3.2 Supplier Deliveries 50.3 50.6 -0.3 The Institute for Supply Management’s Purchasing Managers index (PMI) fell four tenths of a percentage point to 48.2 in December. Because 50 is the dividing line between growth and decline, the PMI index indicates that manufacturing activity is contracting. The indexes of new orders and production, however, increased by three tenths and six tenths of a percentage point, respectively. Both remain just below 50. The employment index fell three-tenths of a percentage point and is back below 50, indicating decline. The supplier deliveries index decreased, but a decrease in this index signals that deliveries are growing. 1Greater than 50 percent equals growth. Source(s): Institute of Supply Management

Manufacturing Output Grew Very Slowly in 2015 Manufacturing Production, December 2015 Percent Change Industry Dec. 3MMA1 Manufacturing -0.1 1.1 Publishing -0.5 0.6 Top 60% of Production Paper -0.8 -2.4 Food 2.0 Medical equip., supplies 1.2 1.0 Aerospace 0.0 Electrical equipment 2.3 7.1 Computer, electronics 1.6 Soap, cleaning -2.9 8.0 Machinery -3.7 Nonmetal mineral prods. 5.1 Fabricated metal -1.7 Printing, support -0.2 2.7 Motor vehicles, parts 6.5 Next 4% of Production Pharmaceutical -0.6 0.8 Furniture -0.9 3.1 Petroleum, coal products. -1.2 3.5 Wood products 0.7 1.8 Next 33% of Production Textile mills 2.2 Basic chemical 0.1 4.2 Textile product mills -1.5 1.4 Primary metals -3.5 -7.7 Apparel -1.0 -3.8 Plastics, rubber 2.5 Leather products -8.2 Beverage, tobacco 0.3 The manufacturing index slipped one-tenth of a percent in December was just eight-tenths of a percent above its December 2014 level. The index was up and down throughout 2015. For the year as a whole manufacturing output grew by 2 percent.   The output of durable goods moved up one-tenth of a percent in December, reversing its decline in November. The individual indexes for durable goods industries tend to be volatile on a month-to-month basis. The output of nondurables goods declined by two-tenths of a percent. 1Year-to-year percent change in a three-month moving average. Source(s): Federal Reserve Board and MAPI

Exports and Imports Decline in November; Trade Deficit Grows Exports and Imports of Manufacturing Goods, Current dollars The strong dollar continues to take a toll on the manufacturing sector.   Export growth (based on the three-month moving average ending in November) fell 8.6 percent compared to the same period in 2014. Imports declined by 2.7 percent in the same period. The trade balance in manufacturing, which was a negative $754 billion in 2014 is on track to rise by $60 billion to a negative $814 billion in 2015. Source(s): U.S. International Trade Commission and MAPI

Manufacturing Employment Increased in December Change in Manufacturing Employment The number of manufacturing jobs increased by 8 thousand in December up from an increase of 2 thousand in November and the best showing since July 2015. Manufacturing employment was up 30,000 for all of 2015. This increase pales with the increase in 2014 when manufacturing employment increased by 215,000. Source(s): U.S. Bureau of Labor Statistics and MAPI