Manufacturers express decline in optimism

By David Gill -- Home Textiles Today, 11/13/2000 12:00:00 AM

MURRAY HILL, NJ -For the second straight month, manufacturers have expressed a decline in optimism about their business during the near future.

The manufacturers'expectations index, as compiled by Dun & Bradstreet, fell to 17 in October, four points off its September level of 21.

This indicator measures manufacturers'sentiments about the shape of their business over the next three months-meaning that, in the overall sense, things do not look good for the beginning of 2001 to the manufacturing executives who responded to D & B's regular monthly survey.

The index was pushed down the slope by declines in a number of important components. The three-months index for production fell 10 points between September and October, to 36. Also, the index measuring the near future for new orders dropped 11 points, to 37 last month.

The declines in these two components were by far the most dramatic results from the three-month survey. Much smaller dips were seen in the component indices for finished-goods inventories (off seven points, to 2), unfilled orders (down five points, to 3), and exports (down one point, to 28).

Regarding the finished-goods number, Iris Geisler, a D & B economic analyst, said manufacturers "plan to curb finished-goods inventory growth near the point where inventory levels will be shrinking, another indication that they do not expect an unusually strong demand in the near future."

The negative air surrounding the D & B report came on the heels of another downcast report on manufacturing, this one from the National Association of Purchasing Management (NAPM). Two weeks ago, the association said its index of manufacturing activity fell 1.6 points in October, to 48.3.

"Manufacturing is struggling much worse than the non-manufacturing sector of the economy," said Norbert Ore, chairman of NAPM's business survey committee. Citing the hit on U.S. manufacturing exports caused by a recent surge in the value of the dollar, Ore added, "Manufacturing is taking a hard lick from the economy's downturn."

Actually, according to D & B's Geisler, exports are looked upon as a possible fund of strength in the near term. But "few manufacturers seem to expect a rosy future in the next three months," he said.

Underscoring the result from the NAPM October index, D & B's index of manufacturer sentiment for the three months up to and including October fell four points, to 6 from 10 in September.

Once again, the production component of this indicator caused the most fallout, dropping from 19 in September to 10 last month. The exports component, again reflecting what was said by NAPM in its report, fell from 11 in September to 6 in October.