Need Help? (888) 742-5060

In The News:

MAPI Composite Index Hits Record High in June

The manufacturing recovery continues to trend upward and has rebounded from severely depressed levels in 2009, according to the quarterly Manufacturers Alliance/MAPI Survey on the Business Outlook – June 2010, a leading indicator for the industrial sector. The June 2010 composite index rose to a record high 81 percent from 78 percent reported in the March 2010 report, breaking the previous high of 80 percent set in June 2004 and marks the third straight quarter it has reached 50 percent or above. The index started as a quarterly series in 1991.

The new benchmark for the index represents a significant turnaround from March 2009 when the index registered an historic low 21 percent.

"The overall composite index and several forward-looking individual indexes (orders, export orders, and U.S. prospective shipments) achieved new heights and indicate continued recovery in manufacturing," said Donald A. Norman, Ph.D., MAPI economist and survey coordinator. "We should remain cautious, however, because many of the individual indexes are based on year-over-year comparisons. Manufacturing sector production fell sharply during the second quarter of 2009; a broad-based increase in production from the production trough reached at the end of the second quarter of 2009 would naturally lead to an increase in these indexes. Still, the broad-based strength in the composite index and the individual indexes point to further expansion in the next three to six months."

MAPI Composite IndexThe business outlook index is a weighted sum of U.S. shipments, backlogs, inventories, and profit margin indexes. Eleven of 12 individual indexes showed improvement.

The backlog orders index, which compares the second quarter 2010 backlog of orders with the backlog of orders one year earlier, rose to 87 percent in June from 63 percent in the March survey. An accumulation of backlogs usually occurs when new orders exceed shipments and thus indicates growing strength in manufacturing.

The inventory index, based on a comparison of inventory levels in the second quarter of 2010 with those of one year earlier, increased to 44 percent in June from 23 percent in March, still below 50 percent. This indicates inventories were lower on a year-over-year basis but that inventory destocking is nearing its end. The quarterly orders index, based on a comparison of expected orders in the second quarter of 2010 with those in the same quarter one year ago, rose to a record high 97 percent from 85 percent in the previous survey.

The capacity utilization index, based on the percentage of firms operating above 85 percent of capacity, improved to 20 percent in the current survey from 9.8 percent in the previous survey. While still far below the long-term average utilization rate of 32 percent, this is the first significant improvement for an index that had been stuck at very low levels since the fourth quarter of 2008.

The export orders index, which compares second quarter 2010 exports with those of second quarter 2009, set a new high of 85 percent in June from 76 percent in March. Likewise, the U.S. prospective shipments index, which reflects expectations for third quarter 2010 shipments compared with the third quarter of 2009, also set a record, improving to 93 percent in the June survey compared to 88 percent in the March report.

Despite the general level of confidence in the recovery, respondents identified a number of speed bumps that could undermine the recovery. The two most serious threats, each cited by 67.2 percent of the respondents, are continued high unemployment/low income growth, and the growing federal deficit and its impact on interest rates, inflation, and the dollar.

The survey reflects the views on current and future business conditions of 62 senior financial executives representing a broad range of manufacturing industries.

More details available at

© 2019 Gale Media, Inc.

Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit MDM welcomes inbound links from your site. Please cite Modern Distribution Management.

2018-top-distributors-listThe 2018 Top Distributors List

This free PDF includes lists of top distribution companies across 14 sectors.

You will also receive MDM Update, our daily distribution e-newsletter & other distribution-focused content.

Download the Free PDF now >>

MDM-UpdateMDM Update: Daily Newsletter 

Sign up to read the best source for news & trends in wholesale distribution, MDM Update. Delivered daily to your inbox. 

Sign-up for MDM Update >>

Partner Center