Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

U.S. Business Insights Report: Manufacturing

533 views

Published on

Based on Dun & Bradstreet's proprietary data, this monthly report gives insight into the health of the manufacturing sector.

  • Be the first to comment

  • Be the first to like this

U.S. Business Insights Report: Manufacturing

  1. 1. D&B U.S. Business Insights Monthly Report Published May 2012 by Paul Ballew, D&B Chief EconomistD&B Manufacturing Report The violent economic U.S. Trade in Goods shows the revival in 2010-11 downturn in 2008 hit the U.S. Manufacturing sector broadside. Portions of the sector were already limping along due to energy price shocks in 2005-2006 and the significant drop in consumer demand and global commerce early in 2008 resulted in the most significantcontraction in over seven decades. Coming out of thesteep contraction most economists expected a vigorousbounce back due to pent-up demand and the normalcyclical recovery of the sector. Yet, measures of activityfor the Manufacturing sector have been more mutedor at least mixed and have prompted concern over the Source: U.S. Bureau of Economic Analysisresulting impact on the health of this key sector.In this month’s report, Dun & Bradstreet provides insightinto the health of the Manufacturing sector. UtilizingD&B’s proprietary insights we confirm the moderate D&B Key Perspectivestop-line growth reported in governmental measures of ● Manufacturing sector is recovering brisklyactivity. despite tepid demand growthIn addition, a more detailed analysis of the sector reveals ● Financial restructuring has been rapid postsubstantial improvements in the financial health of the 2008 and the pace has acceleratedmanufacturing, positioning industries to grow even ● Leaner and meaner US manufacturersas the overall economic recovery remains tepid. The are poised to improve global competitivehealth of the sector has improved to an extent where positiona sustained revival is highly probable including furtherexpansion in exports.*Department of Planning and Development 01www.dnb.com ©2012 Dun & Bradstreet
  2. 2. D&B U.S. Business Insights Monthly ReportMost macro level measures on manufacturing activity Moderate recovery has been at a consistent rateprovide a generally consistent picture. A close look atthe Industrial Production Index in 2010 and 2011 showsan increasing trend with slight downturns in mid-2010,early 2011 and again in mid-2011. D&B’s proprietary dataon Current Spend in the Manufacturing sector is highlycorrelated with the Industrial Production Index, and thecorrelation increases as industrial production is laggedby four months. This relationship establishes D&B’scurrent spend as a powerful predictor for the IndustrialProduction Index. The Current Spend in manufacturingshows that other than a slight downturn that occurredin early 2011 (followed by a significant accession) the Source for Industrial Production Index: Board of Governors of themoderate recovery has been on a consistent path. Current Federal Reserve SystemSpend data confirms an increasing trend throughout D&B Proprietary Spend Data2010 and continuing through the end of the year. So themodest bounce back in manufacturing has been veryconsistent albeit at a moderate growth rate and the sectoris positioned to continue to bounce along at moderate Financial health has improved dramaticallygrowth rates in 2012.Perhaps more important than confirming the moderatetop-line growth rate, D&B has been able to confirm thedramatic improvement in the financial health of the sector.Failures and bankruptcies in the Manufacturing sectorconfirm the rapid deterioration of the economy startingin 2007. This surge gradually decelerates until 2010 whenmeasures on failures and bankruptcies begin to improvedramatically. This trend in failures and bankruptcies iscorroborated by leading indicators in the Manufacturingsector made available by the U.S. Census Bureau.Further analysis shows (Tables in Appendix), not Source for Manufacturing Value of Shipments and New Orders:unexpectedly, higher percentage of both failures and U.S. Census Bureau Economic Indicators, Manufacturing and Tradebankruptcies in both 2010 and 2011 compared to 2006. Inventories and Sales database.Failures and bankruptcies were also higher in 2010 D&B Proprietary Bankruptcy & Failure Datacompared to 2008. However, 2011 was clearly a turningpoint for the sector and provides strong indications thatthe recovery is on firmer foundation. Significant decreasesin both percentage of failures and bankruptcies comparedto both 2008 and 2010, with the largest decreases havingtaken place in the past year. The bottom line is that thesector, despite only moderate top-line growth, has madesignificant strides in productivity and overall financialwherewithal.At the state level, (Tables in Appendix) the overall trendholds as well. The failure rates of the individual states*Department of Planning and Development 02www.dnb.com ©2012 Dun & Bradstreet
  3. 3. D&B U.S. Business Insights Monthly Reportpeaked in 2009. Alaska, South Dakota, Vermont and Delinquencies have been on a downward trendWyoming are the states that have consistently low failurelevels in the Manufacturing sector while California,Delaware and Nevada have consistently the highest. Thesevariances reflect the mix of manufacturing industries inthese individual states.As with failures, business bankruptcies follow the overalltrend – peak in 2009 with subsequent improvementresulting in achieving close to pre-recession levels.Turning to a more economically sensitive measure,delinquencies, the monthly percent of delinquent dollars91 days past due in 2010 and 2011, show a downwardtrend which further supports measures of improved D&B Proprietary Delinquency Data Percent of Dollars 91 Days Past Due: Manufacturing vs.financial health in the sector. Consistent with measures on Other Industriesfailures and bankruptcies, payment behavior prompts D&Bto have further confidence that the sector has turned thecorner through gains in productivity and restraint of costs.A closer look at the states (Tables in Appendix) in terms of Manufacturing sector has turned the cornerdelinquent dollars shows that Wyoming, in addition to itsconsistent low failure rates, also exhibits consistently lowdelinquency rates. Nevada, Arizona and Florida emergeas the worst states by delinquency rates likely reflectingthe impact of their local economies that have been theepicenter of the housing melt-down. As far as percent of delinquent dollars and businessesby sub-sectors of Manufacturing is concerned (Charts inAppendix), all major sectors of Manufacturing show adecline in December 2011 compared to December 2010.The sub-sectors that show the largest declines in 2011 areLeather and Leather Products and Chemicals and Allied Source: U.S. Bureau of Labor Statistics, Labor Productivity andProducts, by percent of delinquent business and percent of Costs Databasedelinquent dollars, respectively. The sectors showing the Percent YOY Changes in Labor Productivity (Output per Hour)lowest declines by the two above measures, respectively, Index, 2005=100: Manufacturing vs. Other Sectorsare Primary Metal Industries and Tobacco Products.Normally at this stage of economic cycle manufacturingis recovering because of vigorous top-line sales growthdue to pent-up demand. The performance of the currenteconomic cycle does not display this traditional pattern of arapid recovery in demand. Yet, manufacturing is in a revivalmode and the gains are being built on a foundation thatmay prove to be more durable in the long-term. Leaner andmeaner manufacturers are emerging from the current cycleand the strides they have made are positioning them togrow despite lackluster macroeconomic growth.*Department of Planning and Development 03www.dnb.com ©2012 Dun & Bradstreet
  4. 4. D&B U.S. Business Insights Monthly ReportAPPENDIX Failures and Bankruptcies in Manufacturing: 2006-2011 2006 2008 2010 2012 Failures Bankruptcies Failures Bankruptcies Failures Bankruptcies Failures Bankruptcies 2121 1195 3239 1760 3868 2178 2818 1625 % YOY Changes 2006 vs. 2011 2008 vs. 2010 2008 vs. 2011 2010 vs. 2011 Failures Bankruptcies Failures Bankruptcies Failures Bankruptcies Failures Bankruptcies 32.86% 35.98% 19% 24% -13.00% -7.67% -27.15% -25.39% Failures and Bankruptcies: Manufacturing vs. Non-Manufacturing Percent YOY Changes in Failures and Bankruptcies: Manufacturing vs. Non-ManufacturingSource: D&B Proprietary Data*Department of Planning and Development 04www.dnb.com ©2012 Dun & Bradstreet
  5. 5. D&B U.S. Business Insights Monthly Report States with Lowest Percent of Business Failures: 2006 to 2011 Quarter 4: 2006 Quarter 4: 2007 Quarter 4: 2008 State % Failures State % Failures State % Failures Alaska* 0.00% Wyoming* 0.00% Wyoming* 0.07% Maine* 0.08% Alaska* 0.07% Montana* 0.09% Nebraska* 0.12% Delaware* 0.10% North Dakota* 0.20% Quarter 4: 2009 Quarter 4: 2010 Quarter 4: 2011 State % Failures State % Failures State % Failures Vermont* 0.26% Iowa* 0.21% South Dakota* 0.11% Wyoming* 0.29% Louisiana* 0.33% Alaska* 0.13% South Dakota* 0.34% Vermont* 0.34% Vermont* 0.17% *State has less than 10,000 Manufacturing DUNS States with Lowest Percent of Bankruptcies: 2006 to 2011 Quarter 4: 2006 Quarter 4: 2007 Quarter 4: 2008 State % Bankruptcies State % Bankruptcies State % Bankruptcies Alaska* 0.00% Alaska* 0.00% Wyoming* 0.07% Maine* 0.00% Wyoming* 0.00% Montana* 0.08% Iowa* 0.06% Delaware* 0.00% Kansas* 0.09% Quarter 4: 2009 Quarter 4: 2010 Quarter 4: 2011 State % Bankruptcies State % Bankruptcies State % Bankruptcies Vermont* 0.13% Vermont* 0.13% Vermont* 0.04% Maryland* 0.21% Iowa* 0.13% South Dakota* 0.05% North Dakota* 0.22% Mississippi* 0.13% Alaska* 0.06% *State has less than 10,000 Manufacturing DUNSSource: D&B Proprietary Data*Department of Planning and Development 05www.dnb.com ©2012 Dun & Bradstreet
  6. 6. D&B U.S. Business Insights Monthly Report States with Highest Percent of Business Failures: 2006 to 2011 Quarter 4: 2006 Quarter 4: 2007 Quarter 4: 2008 State % Failures State % Failures State % Failures Pennsylvania 0.60% Nevada* 0.60% Mississippi* 0.97% Delaware* 0.58% Alabama* 0.51% Louisiana* 0.74% Ohio 0.47% Georgia 0.50% South Dakota* 0.74% Quarter 4: 2009 Quarter 4: 2010 Quarter 4: 2011 State % Failures State % Failures State % Failures Delaware* 2.53% Delaware* 0.88% Nevada* 0.72% Michigan 1.11% California 0.86% California 0.63% Nevada* 1.05% Nevada* 0.80% Tennessee 0.61% *State has less than 10,000 Manufacturing DUNS States with Highest Percent of Bankruptcies: 2006 to 2011 Quarter 4: 2006 Quarter 4: 2007 Quarter 4: 2008 State % Bankruptcies State % Bankruptcies State % Bankruptcies Pennsylvania 0.51% West Virginia* 0.31% South Dakota* 0.64% Delaware* 0.51% Arizona 0.29% Delaware* 0.39% Michigan 0.32% Indiana 0.29% Tennessee 0.38% Quarter 4: 2009 Quarter 4: 2010 Quarter 4: 2011 State % Bankruptcies State % Bankruptcies State % Bankruptcies Delaware* 2.32% California 0.55% Tennessee 0.45% Michigan 0.72% Delaware* 0.54% Utah* 0.44% Tennessee 0.72% Maine* 0.54% California 0.42% *State has less than 10,000 Manufacturing DUNSSource: D&B Proprietary Data*Department of Planning and Development 06www.dnb.com ©2012 Dun & Bradstreet
  7. 7. D&B U.S. Business Insights Monthly Report States with Lowest Delinquent Dollars Largest YOY change December 2010: % of dollars 91 DPD December 2011: % of dollars 91 DPD December 2010 vs. December 2011 Oklahoma* 0.64% Wyoming* 0.29% Idaho* -75.93% Kentucky* 0.73% Idaho* 0.72% Wyoming* -73.09% Wyoming* 1.06% South Dakota* 0.74% Iowa* -65.30% *State has less than 10,000 Manufacturing DUNS States with Highest Delinquent Dollars Largest YOY change December 2010: % of dollars 91 DPD December 2011: % of dollars 91 DPD December 2010 vs. December 2011 Nevada* 13.63% Nevada* 9.16% New Hampshire* 90.22% Arizona* 7.90% Florida* 7.67% Oklahoma* 42.52% Florida* 7.53% Arizona* 7.30% New Mexico* 41.30% *State has less than 10,000 Manufacturing DUNS DB-3302_12_05_01Source: D&B Proprietary Data*Department of Planning and DevelopmentDun & Bradstreet is the world’s leading source of commercial information and insight on businesses, enabling companies to Decide with Confidence® for more than 170 years. D&B’s globalcommercial database contains more than 205 million business records, enhanced by our proprietary DUNSRight® Quality Process, providing our customers with quality business information.This quality information is the foundation of our global solutions that customers rely on to make critical business decisions.www.dnb.com ©2012 Dun & Bradstreet

×