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Economy in Brief

Manufacturers Expect Improved Growth: Profits Firm
by Tom Moeller July 9, 2004

The Manufacturers Alliance/MAPI Survey of expected business conditions improved sharply for 2Q04, reflecting sharp improvement in order books.

The Composite Business Index rose to its highest level in the series' history which began in 1991. During that period there has been a 63% correlation between the index level and y/y change in factory sector industrial production.

The index of orders, which measures orders in the current quarter versus last year, also rose to its record high. There has been a 94% correlation between the orders index level and the year to year to year change in factory order.

Profit margins were at the highest level on record as the index rose to 79 versus 73 in 1Q and 47 a year ago. Profit margins rose at a record 68% of the firms surveyed and fell at just 10% of those surveyed.

The index of capital spending plans also rose to 75 versus 69 last quarter. These figures were down somewhat from the record high of 81 in 4Q03 as 59% of firms planned to increase capital spending.

Manufacturers Alliance/MAPI Survey 2Q04 1Q04 2Q03 2003 2002 2001
Composite Business Index 80 78 60 67 60 37
  Current Orders Index 93 90 53 70 52 30
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