REGIONS: New Manufacturing Indicator Puts Midwest Behind the U.S.
CHICAGO'S Federal Reserve bank takes a fresh look at Midwest manufacturing . . . and gulps a bit at what it finds.</br></br>Measuring ups and downs in employment is the usual way of tracking manufacturing activity. But this method ignores such important factors as the value added in the production process and the speed at which factory equipment is used.</br></br>With the Federal Reserve Board's monthly Industrial Production Index as a guide, economists at the Chicago Fed came up with a Midwest Manufacturing Index to measure factory output in the bank's five-state district -- Illinois, Indiana, Iowa, Michigan and Wisconsin.</br></br>Unfortunately, the first tabulation shows Midwest manufacturing activity for June up just 1.4% from a year earlier, compared with a 3.6% increase for the U.S. as a whole. A revised computation for the first eight months of 1987 put Midwest manufacturing up 2.3%, against 3.5% for the nation.</br></br>"I'm not overly concerned," says Chicago Fed economist Robert Schnorbus. "We're going through a phase of the recovery where our major industries are in a fairly slow expansion phase. One thing helping us is steel, which is getting close to full capacity. It's the major industry in our region right now."