There's no question that business conditions are improving for the nation's manufacturers. Forty percent of industrial buyers surveyed by PURCHASING Magazine say orders at their companies were up in April, which is twice the number that reported stronger orders in January or February. The result: PURCHASING's Business Activity Index, which went positive (above 50) in March, continued its rise to 58.5 in April 2002.

A purchasing manager in upstate New York remarks that "business is slow, but better." A purchasing manager in Massachusetts says, "Business through first quarter has been better than forecast." And, "sales are looking better," according to one Louisiana-based PM, who adds, "but not as good as they could be."

Industry segments that appear to be perking up include auto and truck parts, mass-transit vehicles, recreational vehicles, some industrial machinery and defense-related equipment. "Orders are up and our production personnel are working overtime," says a senior buyer for a home furnishings maker in New York. "But, we're not sure if this is a true upturn or just a spike in demand."

Indeed, buyers surveyed in April suggest the manufacturing rally is still far too fragile to support the level of price-hike activity they're seeing from certain suppliers.

"We are below 2002 budget numbers because bookings and shipments are tracking at the same level as a year ago," says the purchasing manager for the North Carolina maker of safety and relief valves.

"Our industry is seeing the worst, prolonged period of stagnation on record," adds a materials manager for a Vermont-based maker of metalworking machinery.

The senior buyer for a plastic parts maker in California says "end-user customers are getting even worse in waiting until the last minute—no, the last second—to order."

Nearly a third of buyers polled by PURCHASING Magazine express fears that energy prices may be inflating. A much larger group (37%) is worried about rising steel prices. A buyer in New York sums up the general sentiment when he says, "Accelerated inflation in raw materials costs creates a risk that the economy could dip back into recession." Adds a PM in Michigan: "The last thing we need is an inflationary situation at the start of a recover."

Buyers are especially irked over recent and rapid price increases for steel.

"Demand still is weak from end users, but the mills are raising prices and moving out leadtimes relentlessly," complains the president and steel buyer of a processing distributor in California. "Several steel service centers recently advised price increases, which is unacceptable as manufacturing gears up for a recovery that hasn't even materialized," remarks a purchasing manager for an automated assembly and production machinery maker in Virginia.

Twenty percent of fabricated metals buyers see higher prices ahead, and some say inflation is already occurring.

"Higher steel prices are pushing up market prices for drums and cans," says the purchaser at a paint factory in California. Similar comments come from buyers at companies that make off road vehicles, appliances, tools, industrial machinery and equipment and power transmission machinery.