Chicago, Milwaukee Factory Gauges Weaken Again

In separate reports that show a further decline in manufacturing activity for key Midwestern markets, factory purchasing managers in Chicago and Milwaukee said conditions worsened again in March for their members.

In both cities, their gauges have for months been below the critical level of 50 that separates manufacturing growth from contraction, but the new reports show it getting worse.

The Chicago-area index for total factory activity fell to 35 this month from 43.2 in February, and Bloomberg said the new level is its weakest since March 1982. The Milwaukee group’s index sank to 37 from 41.

Both also reported declines in their categories for current production, and for new orders that determine future output.

Since the manufacturing sector is a major customer base for the trucking industry, the news of a deeper downturn from those two cities is a further blow to carriers’ hopes that the industrial contraction may have bottomed out.

It also runs counter to the sunnier view from reports on consumer spending and sen-timent (see Friday’s Executive Briefing). Since the U.S. factory sector remains weak and may be getting weaker across the country, consumers must be spending more of their money on imports and to take advantage of sales to clear large inventories.

Although trucks carry imported shipments of goods that compete with locally made goods, as long as U.S. factory activity continues to shrink truckers will continue to see new weakness in the demand for their freight services.

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