Mirus Capital AdvisorsMirus Capital Advisors

Tuesday, May 16, 2017

Manufacturing sector remains robust in 2017


Economic activity in the manufacturing sector continued to expand in April, according to the latest Institute for Supply Management (ISM) purchasing manufacturer’s index. While the PMI fell 2.4% from March, the report highlighted comments reflecting “stable to growing business conditions; with new orders, production, employment and inventories of raw materials all growing in April over March”. Employment in the sector is up by 50,000 jobs so far in 2017, a significantly better picture than the 16,000 jobs lost last year.  US manufacturing currently employs 12.4 million workers, up from a low of 11.4 million in early 2010.

At 54.8%, the index in in the “growth” region, above the 50% neutral point indicating manufacturing growth, and the results marked the eighth straight month of increases.

One highlighted comment – “Business is definitely improving. Profit margins are increasing.” (Fabricated Metal Products)  – was particularly good to see as we recently closed a sell-side transaction in the fabricated metal products industry.

The average year-to-date PMI of 56.4% suggests a robust 4.1% annual increase in gross domestic product (GDP), according to ISM calculations. The 54.8% index number for April suggests a 3.6% increase.

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Alan Fullerton is a partner with Mirus Capital Advisors. He works with owners of middle market businesses and can be reached at fullerton@merger.com.

 

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