A rebound for manufacturing in 2013?
After a strong 2011, last year was a season of some ups and downs for manufacturing in the Ninth District, according to the Mid-America Purchasing Management Index (PMI), a monthly survey of manufacturers in nine states, including Minnesota and the Dakotas.
Indexes are reported for new orders, production, inventories, employment, delivery lead time, prices and confidence. An overall PMI score is a composite of individual indexes. The first half of 2012 was fairly strong—with most indexes for district states over 50 (which indicates expansion)—but slowly lost steam. By June, the overall index showed that manufacturing was contracting in Minnesota and South Dakota. Employment was expanding for much of the year, but started contracting by July in South Dakota, and Minnesota followed two months later (see charts).
During this period, North Dakota manufacturers were almost oblivious to national and regional manufacturing trends. Though there have been some volatile dips—not surprisingly, given the state’s small manufacturing base and strong state economy—overall conditions and employment stayed doggedly in expansionary territory.
Now conditions appear to be reversed. By the December survey, many manufacturing indexes turned positive, including employment and the overall index, in both Minnesota and South Dakota. At the same time, conditions in North Dakota softened; in December the overall index barely stayed in expansion mode (50.9), while employment dipped into contraction (48.9). However, this doesn’t appear to be of great concern in the Peace Garden state, which has seen such fast growth from oil drilling and production that the recent lull is expected to be temporary.
The Federal Reserve Bank of Minneapolis also released it's own manufacturing survey earlier this month, which showed 2012 results roughly in line with the Mid-America survey. Respondents expect stable growth in the coming year.
And for a much broader discussion of manufacturing trends in Ninth District states, see the October issue of the fedgazette.