The Federal Reserve Board of Chicago is out with its Midwest manufacturing index for February, and the numbers are something of a milestone.
The Chicago Fed uses 2007 as a baseline, meaning 100 on its index, which the Fed calls “a composite of 15 manufacturing industries that uses hours worked data to measure monthly changes in regional activity.” (We like to think of 100 as basically full staff.)
In February, the manufacturing index, which covers Wisconsin, Iowa, Illinois, Indiana and Michigan, stood at 91.7. The number for automobile manufacturing was even better — 92.2 — while steel manufacturing stands a tad behind, at 90.5 percent.
But that’s an important number, as we’ll explain.
Since the index goes up about a half a percentage point to a point per month, you might extrapolate that the region will be back to 100 by the end of the year. Of course, there’s no way to really nail that, given high gas prices and other economic factors.
But the real story is in the historic numbers.
Take a look at where the MMI stood in June 2009. It was at 67.9, the low for this recession.
That was the month that General Motors filed for a federally sponsored bankruptcy. Chrysler, which was just out of its bankruptcy, had shut down its plants that spring while it was under court protection, and it hadn’t yet cranked them back up.
The automotive number reflects the industry’s crisis: it was at 48.5 in May 2009. Steel, which relies heavily on the auto industry, reached its low for the recession in June 2009, at 57.3.
It has taken the index and both industries until this year to get back into the 90 range. For the overall index and for autos, that happened in January. Steel is back above 90 this month for the first time since the depth of the recession.
So in short, a couple of industries that were in pretty awful shape three years ago, are within shouting distance of normal when it comes to hours worked by those who are employed there. And, the improvement is showing up in an important measurement.