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July APICS Business Outlook Index - Highlights

30 July 1998

Manufacturing Sector Little Changed in July; July APICS Business Outlook Index - Highlights

    FALLS CHURCH, Va., July 30 -- The APICS Business Outlook
Index was little changed in July, dropping slightly to 49.1 from 51.0. The
current component of the index fell to 48.4 from 49.3, while the future
component of the index declined to 49.8 from 52.7.
    "The index must be interpreted in conjunction with the recently ended GM
strike," noted Dr. Michael Evans of Northwestern University, who compiles the
index data each month at the direction of APICS -- The Educational Society for
Resource Management.  "That strike lasted the entire month of July, compared
to the equivalent of half a month in June.  Yet the auto industry generally
shuts down for two weeks in July, so the seasonally adjusted figures for
production probably did not decline much further for the month."
    According to Evans, the production levels at GM will be well above normal
for the next three months, which will add an estimated 0.3% per month to the
overall index of industrial production from August to October.
    Excluding the GM adjustment, the production planning component of the
APICS Index shows only a 0.1% gain, down from 0.6% a year ago.  In that sense,
the non-auto component of the manufacturing sector will remain sluggish in the
second half, rising no faster than the anemic 0.1% average monthly gain in
non-auto manufacturing production for the first half of the year.
    "The weaknesses are occurring in the machinery sector, which continues to
be hurt by the weaker demand in Asia," stated Evans.  "Lower oil and farm
prices are reducing investment in the energy and agricultural sectors," he
added.
    According to the APICS Index, which focuses on the likely outcome in
manufacturing over the next three months, there are no signs of a weakening
economy overall.  The APICS Index was 49.2 for the first quarter, 48.6 for the
second quarter, and 49.1 in July.
    The APICS Index, based on a confidential monthly survey of manufacturing
firms, is compiled by Dr. Michael Evans and APICS, a not-for-profit,
70,000-member educational society of manufacturing and service industry
professionals.
    Media can receive the full report (by fax or by mail) monthly, and
companies can participate by calling Barbara Gleason, APICS, 703-237-8344 or
800-444-2742, Ext. 2271.