Business conditions slip but still positive

Manufacturing survey finds supply problems

Business conditions for Wisconsin manufacturers remain positive but slipped some from March, according to a new survey from Marquette University and the Milwaukee chapter of the Institute for Supply Management.

The survey-based index that measures manufacturing growth in southeastern Wisconsin and northern Illinois remained positive in April, at 57.87, but was down from 61.77 in March and 58.69 in February.

An index score above 50 indicates growth in market conditions, while below 50 indicates a decline.

The section of the index that tracks employment trends was 63.73 in April, down from 66.91 in March.

Survey respondents complained about problems in the supply chain.

“Plenty of new orders for us. However, lower inventories from suppliers continue to be a problem in getting these new orders out the door,” one company said.

“Everybody expects everything tomorrow, no matter what the quantity,” another company said.

In a separate report, the U.S. Commerce Department said Friday the national economy turned in the weakest performance in three years in the January-March quarter as consumers sharply slowed their spending. The result repeats a pattern that has characterized the recovery: lackluster beginnings to the year.

The Commerce Department said the gross domestic product, the total output of goods and services, grew by just 0.7% in the first quarter following a gain of 2.1% in the fourth quarter.

The slowdown primarily reflected slower consumer spending, which grew by just 0.3%. That was the poorest showing in more than seven years.

Analysts blame in part the unusually warm winter, which meant less spending on utility bills.

Economists believe the slowdown will be temporary. They forecast GDP growth will rebound to 3% or better in the current quarter.

Also on Friday, the Federal Reserve Bank of Chicago said its Midwest Economy Index rose to 0.60 in March from 0.28 in February.

A zero value for the index has been associated with the Midwest economy expanding at its historical average rate of growth, while positive numbers indicate aboveaverage growth. The index covers Wisconsin, Iowa, Michigan, Illinois and Indiana.

The manufacturing section of the index increased to 0.22 in March from 0.10 in February

At 0.25, Wisconsin led the overall Midwest Economy Index.