The Economy

Manufacturing Business Outlook Shows Continuing Contraction

Dec. 21, 2004

However, survey suggests makings of manufacturing recovery exist, reports Manufacturers Alliance/MAPI.

Although U.S. manufacturing output is likely to continue to contract during the next three months, the makings of a business recovery for companies that make durable and nondurable goods appear to exist, indicates the latest Business Outlook Survey from the Manufacturers Alliance/MAPI, an Arlington, Va.-based research group. The quarterly index, which is a weighted sum of shipments, backlogs, inventories, and profit margins, was at the 40% mark in September, compared with 35% in June and an all-time low of 34% in March of this year. An index level below 50% signals a shrinking manufacturing sector; when the index is above 50% it is generally a sign that the manufacturing sector of the U.S. economy is expanding. "The fact that the index reached bottom in March 2001 and has since risen, even if only slightly, is a sign that the manufacturing sector is starting to recover," says Donald A. Norman, the economist who surveys a sample of senior financial officers at Manufacturers Alliance/MAPI member firms and calculates the index. "The attacks on Sept. 11 may delay the recovery, but the foundation for a recovery appears to be in place," The inventory component of the Business Outlook Survey index is now at 37%, some eight percentage points below its June 2001 mark of 45% and dramatically lower than this past March's 67%. This indicates that manufacturing inventories are continuing to decline. "In particular, the fact that an inventory correction is underway is a hopeful sign that the inventory overhang is being reduced. Once it is, manufacturing output should increase," says Norman.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.