MANUFACTURING EXECUTIVES EXPECT MODERATELY SLOWER SHORT-TERM ECONOMIC GROWTH, ACCORDING TO DUN & BRADSTREET SURVEY; First Three Months of 1996 Show Stronger Production Levels and Profits, Increased Demand for Durable Goods

Business Wire, April 15, 1996

WILTON, CONN.--(BUSINESS WIRE)--April 16, 1996--U.S. manufacturers expect moderately slower growth over the coming three months, according to Dun & Bradstreet's latest nationwide survey of manufacturing executives.

However, executives also reported stronger growth in production levels and profits during the past three months, thanks in part to increased demand for durable goods and industrial machinery and equipment.

"The manufacturing sector has clearly recovered some of the ground lost to this year's severe winter weather," said Joseph W. Duncan, vice president and chief economist for The Dun & Bradstreet Corporation. "However, it is also apparent that manufacturers predict slower growth as we move into late spring and summer. The sector predicts a gradual decline in demand both for non-durable goods such as clothing, food and tobacco products, as well as for durable goods including industrial equipment and raw materials."

Note to Editors

The Dun & Bradstreet Manufacturing Survey is summarized by three

composite Industrial Sentiment Indexes (ISIs) covering three

different time frames: the coming three months, the past three

months, and the coming 12 months. (The results for the coming

12 months are available upon request.) Each ISI is made up of five

component indexes: production, new orders, unfilled orders, exports

and finished goods inventories. The ISIs are calculated by combining

the positive, negative and neutral responses to the five components.

Each component is calculated by subtracting the percentage of

respondents expecting a decrease in production, new orders, etc.

from those expecting an increase. An increase in finished goods

inventories is considered a negative response. Unless otherwise

indicated, the increases and decreases in indexes represent changes

from the previous month.

Manufacturers Predict Continued Expansion, But Slower Growth in Production Levels and New Orders through June

Manufacturers are optimistic that their sector will continue its expansion through the first half of 1996, but the pace of that growth will most likely be somewhat slower. The Industrial Sentiment Index for the coming three months dropped four points to 19, driven primarily by predictions that production levels and new orders will grow at a much slower rate. The Production Levels Index for the coming three months fell 11 points to 44, and the Profits Index fell seven points to 47. The Unfilled Orders Index declined three points to 6, reflecting a lower level of pent-up market demand. The Finished Goods Inventories Index for the coming three months declined slightly to 13, and the Exports Index was slightly higher at 6.

"Manufacturers apparently attribute the recent improvement in their results to a flurry of early spring market activity, but do not expect the pace of growth to pick up in the short-term future," Duncan commented. "While most manufacturers continue to predict growth in new orders through June, relatively high inventory levels and the weak pricing environment have prompted them to plan for more moderate production levels."

Manufacturers expect moderately slower growth in prices in the coming three months, as the Selling Prices Index fell three points to 15. The Employment Index declined very slightly to 20 as a strong contingent of manufacturing executives continued to report plans to add jobs during the period. The Total Unit Costs Index was six points lower at 18.

Manufacturers Report Increase Factory Output and Higher Levels of New Orders in Early 1996

Manufacturers reported heightened production levels and new orders in the March survey as the sector recovered slightly from the virtually stagnant conditions that marked the first two months of the year. The Industrial Sentiment Index for the past three months gained three points to 4. The Production Levels Index rose eight points to 7, and the New Orders Index climbed four points to 9. The Unfilled Orders Index rose four points to 1. Manufacturers reported a very slight decline in inventory levels, as the Finished Goods Inventories Index dropped to minus 2. The Exports Orders Index also declined slightly to 0.

Prices were basically stable in the manufacturing sector during the period. The Prices Index for the past three months increased one point to 7. The Employment Index rose six points to 2, and the Total Unit Costs Index fell two points to 31.

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