Category Archives: ISM

Manufacturing ISM® Report On Business®

March 2020

PMI® at 49.1%

Production, New Orders, and Employment Contracting
Supplier Deliveries Slowing at Faster Rate; Backlog Contracting
Raw Materials Inventories Contracting; Customers’ Inventories Too Low
Prices Decreasing; Exports and Imports Contracting

(Tempe, Arizona) — Economic activity in the manufacturing sector contracted in March, and the overall economy grew for the 131st consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The March PMI® registered 49.1 percent, down 1 percentage point from the February reading of 50.1 percent. The New Orders Index registered 42.2 percent, a decrease of 7.6 percentage points from the February reading of 49.8 percent. The Production Index registered 47.7 percent, down 2.6 percentage points compared to the February reading of 50.3 percent. The Backlog of Orders Index registered 45.9 percent, a decrease of 4.4 percentage points compared to the February reading of 50.3 percent. The Employment Index registered 43.8 percent, a decrease of 3.1 percentage points from the February reading of 46.9 percent.

“The Supplier Deliveries Index registered 65 percent, up 7.7 percentage points from the February reading of 57.3 percent, and limited the decrease in the composite PMI®. The Supplier Deliveries Index is one of five equally weighted subindexes that directly factor into the PMI®, along with New Orders, Production, Employment and Inventories. Supplier Deliveries is the only ISM® Report On Business® index that is inversed — a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases. However, the high index reading in March was primarily a product of coronavirus-related supply problems.

“The Inventories Index registered 46.9 percent, 0.4 percentage point higher than the February reading of 46.5 percent. The Prices Index registered 37.4 percent, down 8.5 percentage points compared to the February reading of 45.9 percent. The New Export Orders Index registered 46.6 percent, a decrease of 4.6 percentage points compared to the February reading of 51.2 percent. The Imports Index registered 42.1 percent, a 0.5-percentage point decrease from the February reading of 42.6 percent.

“Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus (COVID-19) pandemic and energy market volatility. The PMI® returned to contraction territory, and with a negative trajectory. Demand slumped, with (1) the New Orders Index contracting at a strong level, in part pushed by new export order contraction, (2) the Customers’ Inventories Index remaining at ‘too low’ status, but increasing at a level considered a negative for future production, (3) the Backlog of Orders Index contracting again, at a moderate rate. Consumption (measured by the Production and Employment indexes) contributed negatively (a combined 5.7-percentage point decrease) to the PMI® calculation, with activity contracting at a faster rate. Inputs — expressed as supplier deliveries, inventories and imports — strengthened in March, due primarily to supplier delivery difficulties; inventory contraction stabilized. Despite imports contracting at strong rates due primarily to coronavirus impacts, inputs contributed positively to the PMI® calculation (the Imports Index does not directly factor into the PMI®). Prices continued to contract (and at a faster rate in March), supporting a negative outlook.

“The coronavirus pandemic and shocks in global energy markets have impacted all manufacturing sectors. Among the six big industry sectors, Food, Beverage & Tobacco Products remains strongest, followed by Chemical Products, which in addition to the pharmaceutical component, is a significant contributor to the Food, Beverage & Tobacco Products Industry and beneficiary of low energy and feedstock prices. Transportation Equipment and Petroleum & Coal Products are the weakest sectors. Sentiment regarding near-term growth this month is strongly negative, by a 2-to-1 ratio,” says Fiore.

Of the 18 manufacturing industries, the 10 that reported growth in March — listed in order — are: Printing & Related Support Activities; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Wood Products; Paper Products; Chemical Products; Computer & Electronic Products; Primary Metals; Miscellaneous Manufacturing; and Plastics & Rubber Products. The six industries reporting contraction in March, in order, are: Petroleum & Coal Products; Textile Mills; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; and Machinery.

WHAT RESPONDENTS ARE SAYING
    • “COVID-19 is impacting China’s raw material supply chain. We are now seeing revenue impact in that region. Our operations team is reviewing plans for spread of the virus.” (Computer & Electronic Products)
    • “The two main issues affecting our business [are] COVID-19 and the oil-price war. We are in daily discussions and meeting constantly, updating tracking logs to document high risk concerns.” (Chemical Products)
    • “COVID-19 impact has extended to Europe and North America. The virus escalation is affecting our purchasing and logistics operations. We have incurred air-shipment and production interruptions due to shortages of raw materials and components.” (Transportation Equipment)
    • “We are experiencing a record number of orders due to COVID-19.” (Food, Beverage & Tobacco Products)
    • “World demand for petroleum products is declining, while supply is ramping up. We have lost supply chain visibility to certain locations.” (Petroleum & Coal Products)
    • “COVID-19’s spread in the U.S. may start impacting our domestic business. As for Asian suppliers, they are starting to get back up to speed.” (Fabricated Metal Products)
    • “COVID-19 has caused a 30-percent reduction in productivity in our factory.” (Machinery)
    • “A big part of our business is hospitality, and we are seeing demand drop and an increase in cancellations.” (Nonmetallic Mineral Products)
    • “All North American manufacturing plants have ceased operations or drastically scaled back as a result of customer plant closings and other responses to COVID-19.” (Plastics & Rubber Products)
  • “Volumes are down 4.3 percent, and some areas of the supply chain are being affected by the coronavirus.” (Furniture & Related Products)

Manufacturing at a Glance
March 2020

Index Series Index Mar Series Index Feb Percentage Point Change Direction Rate of Change Trend* (Months)
PMI® 49.1 50.1 -1.0 Contracting From Growing 1
New Orders 42.2 49.8 -7.6 Contracting Faster 2
Production 47.7 50.3 -2.6 Contracting From Growing 1
Employment 43.8 46.9 -3.1 Contracting Faster 8
Supplier Deliveries 65.0 57.3 +7.7 Slowing Faster 5
Inventories 46.9 46.5 +0.4 Contracting Slower 10
Customers’ Inventories 43.4 41.8 +1.6 Too Low Slower 42
Prices 37.4 45.9 -8.5 Decreasing Faster 2
Backlog of Orders 45.9 50.3 -4.4 Contracting From Growing 1
New Export Orders 46.6 51.2 -4.6 Contracting From Growing 1
Imports 42.1 42.6 -0.5 Contracting Faster 2
OVERALL ECONOMY Growing Slower 131
Manufacturing Sector Contracting From Growing 1
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

Commodities reported up/down in price and in short supply

Commodities Up in Price

Capacitors (2); Circuit Card Assemblies; Isopropyl Alcohol; Personal Protective Equipment (PPE) — Gloves; Resistors (2); Steel — Hot Rolled* (5); and Steel Products (2).

Commodities Down in Price

Aluminum (2); Aluminum Products (3); Base Oils; Copper (2); Corrugate (2); Crude Oil (2); Diesel Fuel; Fuel; Heating Oil; Natural Gas (4); Oil Products; Plastic; Scrap (2); and Steel — Hot Rolled* (2).

Commodities in Short Supply

Cleaning Wipes; Hand Sanitizer; Isopropyl Alcohol; Paper Towels; Personal Protective Equipment (PPE) — Gloves; PPE — Masks; and Toilet Paper.

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates both up and down in price.


MARCH 2020 Manufacturing Index Summaries


PMI®

Manufacturing contracted in March, as the PMI® registered 49.1 percent, a 1-percentage point decrease from the February reading of 50.1 percent. “The PMI® contracted in March after expanding marginally in January and February. Three of the big six industries expanded, with Food, Beverage & Tobacco Products expanding strongly. Only one (Supplier Deliveries) of the PMI®’s 10 subindexes recorded expansion, down from four the previous month,” says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March PMI® indicates growth for the 131st consecutive month in the overall economy, but a return to contraction by the manufacturing sector following two months of expansion. “The past relationship between the PMI® and the overall economy indicates that the PMI® for March (49.1 percent) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.

The Last 12 Months

Month PMI®
Mar 2020 49.1
Feb 2020 50.1
Jan 2020 50.9
Dec 2019 47.8
Nov 2019 48.1
Oct 2019 48.5
Month PMI®
Sep 2019 48.2
Aug 2019 48.8
Jul 2019 51.3
Jun 2019 51.6
May 2019 52.3
Apr 2019 53.4
50.0
53.4
47.8

New Orders

ISM®’s New Orders Index registered 42.2 percent in March, a decrease of 7.6 percentage points compared to the 49.8 percent reported for February. This indicates that new orders contracted for the second consecutive month. This is the index’s lowest reading since March 2009, when it registered 41.3 percent. “Of the top six industry sectors, three expanded, with Food, Beverage & Tobacco Products expanding strongly, and Chemical Products and Computer & Electronic Products expanding modestly. Fabricated Metal Products, Transportation Equipment and Petroleum & Coal Products are in strong contraction territory,” says Fiore. A New Orders Index above 52.5 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

Of the 18 manufacturing industries, nine reported growth in new orders in March, in the following order: Wood Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Chemical Products; and Computer & Electronic Products. The nine industries reporting a decline in new orders in March — in the following order — are: Petroleum & Coal Products; Transportation Equipment; Primary Metals; Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Machinery.

New Orders % Higher % Same % Lower Net Index
Mar 2020 23.5 44.4 32.1 -8.6 42.2
Feb 2020 28.8 49.1 22.0 +6.8 49.8
Jan 2020 24.8 54.4 20.8 +4.0 52.0
Dec 2019 18.6 51.2 30.2 -11.6 47.6

Production

ISM®’s Production Index registered 47.7 percent in March, 2.6 percentage points lower than the 50.3 percent reported for February, indicating a return to contraction following two months of expansion. “Two of six big industry sectors expanded, the same number as the previous month. A lack of new orders, insufficient backlog and supplier delivery restrictions contributed to reduced production output,” says Fiore. An index above 51.7 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The seven industries reporting growth in production during the month of March — listed in order — are: Wood Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Primary Metals; Food, Beverage & Tobacco Products; Chemical Products; and Electrical Equipment, Appliances & Components. The five industries reporting a decrease in production in March are: Transportation Equipment; Textile Mills; Fabricated Metal Products; Computer & Electronic Products; and Machinery. Six industries reported no change in production in March compared to February.

Production % Higher % Same % Lower Net Index
Mar 2020 21.5 53.7 24.8 -3.3 47.7
Feb 2020 26.4 53.5 20.1 +6.3 50.3
Jan 2020 25.3 55.9 18.8 +6.5 54.3
Dec 2019 15.8 49.8 34.4 -18.6 44.8

Employment

ISM®’s Employment Index registered 43.8 percent in March, a decrease of 3.1 percentage points compared to the February reading of 46.9 percent. This is the lowest reading since May 2009, when the index registered 35.3 percent. “This is the eighth month of employment contraction, and at a faster rate compared to February. Among the six big industry sectors, two expanded and four contracted. Twenty-nine percent of panelist comments noted staffing-expansion plans, with the rest indicating a slowing, hiring freeze or head-count reduction,” says Fiore. An Employment Index above 50.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, three reported employment growth in March: Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Computer & Electronic Products. The 13 industries reporting a decrease in employment in March, in the following order, are: Petroleum & Coal Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Transportation Equipment; Fabricated Metal Products; Plastics & Rubber Products; Primary Metals; Furniture & Related Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; and Machinery.

Employment % Higher % Same % Lower Net Index
Mar 2020 8.6 70.1 21.3 -12.7 43.8
Feb 2020 11.7 69.1 19.2 -7.5 46.9
Jan 2020 11.7 66.0 22.3 -10.6 46.6
Dec 2019 11.5 63.7 24.8 -13.3 45.2

Supplier Deliveries*

The delivery performance of suppliers to manufacturing organizations was slower in March, as the Supplier Deliveries Index registered 65 percent. This is 7.7 percentage points higher than the 57.3 percent reported for February. “Suppliers continue to struggle to deliver, at a much stronger rate compared to February. The index reached its highest level since June 2018, when it registered 68.2 percent. The coronavirus pandemic was the focus of 66 percent of this subindex’s comments, with a third of those comments related to supply chain constraints from China,” says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 16 industries reporting slower supplier deliveries in March — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Transportation Equipment; Primary Metals; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Machinery; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; and Electrical Equipment, Appliances & Components. No industry reported faster supplier deliveries in March.

Supplier Deliveries % Slower % Same % Faster Net Index
Mar 2020 35.7 58.6 5.7 +30.0 65.0
Feb 2020 20.3 74.0 5.7 +14.6 57.3
Jan 2020 16.8 72.3 10.9 +5.9 52.9
Dec 2019 11.5 81.4 7.0 +4.5 52.2

Inventories

The Inventories Index registered 46.9 percent in March, a 0.4-percentage point increase from the 46.5 percent reported for February. “The index contracted for a 10th straight month, but at a slower rate. Inventories are expected to grow as disruptions in the supply chain lead to inefficiencies in material conversion and continued advance stocking to protect production schedules,” says Fiore. An Inventories Index greater than 44.3 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The five industries reporting higher inventories in March are: Printing & Related Support Activities; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Primary Metals; and Chemical Products. The 11 industries reporting a decrease in inventories in March — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Wood Products; Textile Mills; Machinery; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; and Computer & Electronic Products.

Inventories % Higher % Same % Lower Net Index
Mar 2020 20.5 55.0 24.5 -4.0 46.9
Feb 2020 14.9 66.6 18.5 -3.6 46.5
Jan 2020 18.2 61.2 20.6 -2.4 48.8
Dec 2019 17.5 58.1 24.4 -6.9 49.2

Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 43.4 percent in March, which is 1.6 percentage points higher than the 41.8 percent reported for February, indicating that customers’ inventory levels were considered too low. “Customers’ inventories are too low for the 42nd consecutive month; however, the index took a step toward ‘about right’ territory in March. These inventories remain at an acceptable level to support future production output. Of note: the ‘too low’ inventory in the Food, Beverage & Tobacco Products sector,” says Fiore.

Of 18 industries, the only industry reporting higher customer inventories in March is Transportation Equipment. The 12 industries reporting customers’ inventories as too low during March — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Textile Mills; Paper Products; Chemical Products; Plastics & Rubber Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Machinery.

Customers’ Inventories % Reporting % Too High % About Right % Too Low Net Index
Mar 2020 75 11.4 64.0 24.6 -13.2 43.4
Feb 2020 76 6.6 70.4 23.0 -16.4 41.8
Jan 2020 77 10.1 67.5 22.4 -12.3 43.8
Dec 2019 79 8.8 64.7 26.5 -17.7 41.1

Prices*

The ISM® Prices Index registered 37.4 percent in March, a decrease of 8.5 percentage points from the February reading of 45.9 percent, indicating raw materials prices decreased for the second consecutive month, at a much faster rate. “Prices contracted in March, driven primarily by scrap steel, aluminum, corrugate, copper, heating oil and other energy sources. Prices contracted to their lowest level since January 2016, when the index registered 33.9 percent,” says Fiore. A Prices Index above 52.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

The two industries reporting paying increased prices for raw materials in March are: Wood Products; and Computer & Electronic Products. The 15 industries reporting a decrease in prices for raw materials in March — listed in order — are: Petroleum & Coal Products; Primary Metals; Furniture & Related Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Paper Products; Fabricated Metal Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Machinery; and Miscellaneous Manufacturing.

Prices % Higher % Same % Lower Net Index
Mar 2020 11.6 51.7 36.7 -25.1 37.4
Feb 2020 16.6 58.6 24.8 -8.2 45.9
Jan 2020 23.8 59.2 17.1 +6.7 53.3
Dec 2019 16.5 70.5 13.0 +3.5 51.7

Backlog of Orders*

ISM®’s Backlog of Orders Index registered 45.9 percent in March, 4.4 percentage points lower than the 50.3 percent reported in February, indicating order backlogs contracted after expanding for one month. “Backlogs returned to contraction territory, as a result of weak new order and new export order levels. Only one of the six big industry sectors’ backlogs expanded during the period,” says Fiore.

Six of the 18 industries reported growth in order backlogs in March, in the following order: Apparel, Leather & Allied Products; Wood Products; Paper Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; and Chemical Products. In March, eight industries reported lower backlogs, in the following order: Petroleum & Coal Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; and Computer & Electronic Products.

Backlog of Orders % Reporting % Higher % Same % Lower Net Index
Mar 2020 90 18.1 55.5 26.3 -8.2 45.9
Feb 2020 88 21.8 57.0 21.3 +0.5 50.3
Jan 2020 88 17.1 57.2 25.6 -8.5 45.7
Dec 2019 89 12.6 61.4 26.0 -13.4 43.3

New Export Orders*

ISM®’s New Export Orders Index registered 46.6 percent in March, a decrease of 4.6 percentage points compared to the February reading of 51.2 percent. “The New Export Orders Index fell back into contraction territory after two consecutive months of growth. Only one of the six big industry sectors expanded during the period, down from three the previous month,” says Fiore.

The four industries reporting growth in new export orders in March are: Apparel, Leather & Allied Products; Paper Products; Chemical Products; and Miscellaneous Manufacturing. The six industries reporting a decrease in new export orders in March, in the following order, are: Transportation Equipment; Fabricated Metal Products; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products. Seven industries reported no change in exports in March compared to February.

New Export Orders % Reporting % Higher % Same % Lower Net Index
Mar 2020 76 12.5 68.1 19.4 -6.9 46.6
Feb 2020 78 14.8 72.9 12.3 +2.5 51.2
Jan 2020 77 15.4 75.9 8.8 +6.6 53.3
Dec 2019 79 11.3 72.2 16.6 -5.3 47.3

Imports*

ISM®’s Imports Index registered 42.1 percent in March, a decrease of 0.5 percentage point compared to the 42.6 percent reported for February. “For the second consecutive month, imports were in contraction territory, at levels not seen since the summer of 2009. As was the case in the Supplier Deliveries Index comments, respondents indicated the coronavirus as the primary cause of reduced import activity,” says Fiore.

The four industries reporting growth in imports in March are: Wood Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; and Chemical Products. The 11 industries reporting a decrease in imports in March — in the following order — are: Paper Products; Apparel, Leather & Allied Products; Primary Metals; Petroleum & Coal Products; Transportation Equipment; Machinery; Furniture & Related Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Fabricated Metal Products.

Imports % Reporting % Higher % Same % Lower Net Index
Mar 2020 83 16.5 51.4 32.2 -15.7 42.1
Feb 2020 85 12.2 60.8 27.0 -14.8 42.6
Jan 2020 84 13.6 75.4 11.0 +2.6 51.3
Dec 2019 85 13.3 71.0 15.7 -2.4 48.8
*The Supplier Deliveries, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures decreased by eight days in March to 135 days. Average lead time for Production Materials increased by one day in March to 65 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased by six days in March to 37 days.

Percent Reporting

Capital Expenditures Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year + Average Days
Mar 2020 22 6 9 21 24 18 135
Feb 2020 22 5 7 19 28 19 143
Jan 2020 22 4 10 20 25 19 140
Dec 2019 20 5 9 19 26 21 147
Production Materials Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year + Average Days
Mar 2020 12 28 31 20 7 2 65
Feb 2020 10 34 28 19 7 2 64
Jan 2020 11 34 27 18 8 2 65
Dec 2019 11 33 28 20 6 2 63
MRO Supplies Hand-to-Mouth 30 Days 60 Days 90 Days 6 Months 1 Year + Average Days
Mar 2020 40 32 16 8 3 1 37
Feb 2020 40 38 14 6 2 0 31
Jan 2020 40 36 14 8 2 0 32
Dec 2019 40 35 15 5 4 1 37

November 2016 Manufacturing ISM® Report On Business®

PMI® at 53.2%

New Orders, Production and Employment Growing
Inventories Contracting
Supplier Deliveries Slowing

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 90th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The November PMI® registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent. The New Orders Index registered 53 percent, an increase of 0.9 percentage point from the October reading of 52.1 percent. The Production Index registered 56 percent, 1.4 percentage points higher than the October reading of 54.6 percent. The Employment Index registered 52.3 percent, a decrease of 0.6 percentage point from the October reading of 52.9 percent. Inventories of raw materials registered 49 percent, an increase of 1.5 percentage points from the October reading of 47.5 percent. The Prices Index registered 54.5 percent in November, the same reading as in October, indicating higher raw materials prices for the ninth consecutive month. Comments from the panel cite increasing demand, some tightness in the labor market and plans to reduce inventory by the end of the year.”

Of the 18 manufacturing industries, 11 are reporting growth in November in the following order: Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; and Primary Metals. The six industries reporting contraction in November — listed in order — are: Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Furniture & Related Products.

WHAT RESPONDENTS ARE SAYING …
  • “Raw materials have been rather flat. Ramping up for year-end and reducing inventory is main supply chain goal at this time.” (Chemical Products)
  • “Strong manufacturing numbers in anticipation of strong year-end bookings.” (Computer & Electronic Products)
  • “Business is still steady. We are foregoing our shutdown over Christmas break due to an increase in customer orders.” (Plastics & Rubber Products)
  • “Heading into 2017, our business levels look pretty consistent compared to 2016.” (Primary Metals)
  • “Sector remains strong, orders and forecasts are consistent and demand outlook is positive.” (Food, Beverage & Tobacco Products)
  • “New spec buildings going up in our area. Local companies adding additional production space which equates to higher employment.” (Machinery)
  • “Business conditions are good. Labor market is tightening such that it is difficult to staff to completely fulfill production demand.” (Miscellaneous Manufacturing)
  • “We are seeing an upswing in customer Requests for Quotations this month; this is a positive sign for our business.” (Textile Mills)
  • “Continued strong seasonal demand for product.” (Nonmetallic Mineral Products)
  • “2017 is looking to be a very busy year.” (Fabricated Metal Products)
MANUFACTURING AT A GLANCE
November 2016
Index Series
Index
Nov
Series
Index
Oct
Percentage
Point
Change
Direction Rate
of
Change
Trend*
(Months)
PMI® 53.2 51.9 +1.3 Growing Faster 3
New Orders 53.0 52.1 +0.9 Growing Faster 3
Production 56.0 54.6 +1.4 Growing Faster 3
Employment 52.3 52.9 -0.6 Growing Slower 2
Supplier Deliveries 55.7 52.2 +3.5 Slowing Faster 7
Inventories 49.0 47.5 +1.5 Contracting Slower 17
Customers’ Inventories 49.0 49.5 -0.5 Too Low Faster 2
Prices 54.5 54.5 0.0 Increasing Same 9
Backlog of Orders 49.0 45.5 +3.5 Contracting Slower 5
New Export Orders 52.0 52.5 -0.5 Growing Slower 9
Imports 50.5 52.0 -1.5 Growing Slower 2
OVERALL ECONOMY Growing Faster 90
Manufacturing Sector Growing Faster 3

Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price

Aluminum*; Caustic Soda; Copper; Corrugate (2); Corrugated Boxes; Linerboard; Methanol (2); Scrap Steel; Stainless Steel (8); Steel (11); and Steel — Cold Rolled.

Commodities Down in Price

Aluminum* (2); Natural Gas; Plastic Resins; Propylene; and Steel — Hot Rolled (4).

Commodities in Short Supply

None (2).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.


NOVEMBER 2016 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in November as the PMI® registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent, indicating growth in manufacturing for the third consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI® indicates growth for the 90th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the third consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through November (51.2 percent) corresponds to a 2.5 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for November (53.2 percent) is annualized, it corresponds to a 3.2 percent increase in real GDP annually.”

THE LAST 12 MONTHS
Month PMI®   Month PMI®
Nov 2016 53.2   May 2016 51.3
Oct 2016 51.9   Apr 2016 50.8
Sep 2016 51.5   Mar 2016 51.8
Aug 2016 49.4   Feb 2016 49.5
Jul 2016 52.6   Jan 2016 48.2
Jun 2016 53.2   Dec 2015 48.0
Average for 12 months – 51.0
High – 53.2
Low – 48.0
New Orders

ISM®’s New Orders Index registered 53 percent in November, which is an increase of 0.9 percentage point when compared to the 52.1 percent reported for October, indicating growth in new orders for the third consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The nine industries reporting growth in new orders in November — listed in order — are: Petroleum & Coal Products; Miscellaneous Manufacturing; Textile Mills; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Machinery; and Primary Metals. The nine industries reporting a decrease in new orders during November — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Fabricated Metal Products; Transportation Equipment; and Plastics & Rubber Products.

New
Orders
%
Better
%
Same
%
Worse
Net Index
Nov 2016 27 51 22 +5 53.0
Oct 2016 24 56 20 +4 52.1
Sep 2016 27 53 20 +7 55.1
Aug 2016 22 52 26 -4 49.1
Production

ISM®’s Production Index registered 56 percent in November, which is an increase of 1.4 percentage points when compared to the 54.6 percent reported for October, indicating growth in production for the third consecutive month. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The nine industries reporting growth in production during the month of November — listed in order — are: Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; Textile Mills; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; and Machinery. The six industries reporting a decrease in production during November — listed in order —are: Printing & Related Support Activities; Transportation Equipment; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.

Production %
Better
%
Same
%
Worse
Net Index
Nov 2016 26 57 17 +9 56.0
Oct 2016 25 56 19 +6 54.6
Sep 2016 24 56 20 +4 52.8
Aug 2016 19 59 22 -3 49.6
Employment

ISM®’s Employment Index registered 52.3 percent in November, a decrease of 0.6 percentage point when compared to the October reading of 52.9 percent, indicating growth in employment in November for the second consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the seven industries reporting employment growth in November — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Paper Products; Computer & Electronic Products; Primary Metals; and Machinery. The nine industries reporting a decrease in employment in November — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Chemical Products; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components.

Employment %
Higher
%
Same
%
Lower
Net Index
Nov 2016 15 72 13 +2 52.3
Oct 2016 20 62 18 +2 52.9
Sep 2016 17 63 20 -3 49.7
Aug 2016 16 65 19 -3 48.3
Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in November as the Supplier Deliveries Index registered 55.7 percent, which is 3.5 percentage points higher than the 52.2 percent reported for October. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The nine industries reporting slower supplier deliveries in November — listed in order — are: Miscellaneous Manufacturing; Fabricated Metal Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Transportation Equipment; Computer & Electronic Products; and Machinery. The only industry reporting faster supplier deliveries in November is Paper Products. Eight industries reported no change in supplier deliveries in November compared to October.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
Nov 2016 11 86 3 +8 55.7
Oct 2016 8 87 5 +3 52.2
Sep 2016 8 85 7 +1 50.3
Aug 2016 8 86 6 +2 50.9
Inventories*

The Inventories Index registered 49 percent in November, which is an increase of 1.5 percentage points when compared to the 47.5 percent reported for October, indicating raw materials inventories are contracting in November for the 17th consecutive month. An Inventories Index greater than 42.8 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The five industries reporting higher inventories in November are: Furniture & Related Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; and Computer & Electronic Products. The six industries reporting lower inventories in November — listed in order — are: Textile Mills; Machinery; Fabricated Metal Products; Miscellaneous Manufacturing; Transportation Equipment; and Nonmetallic Mineral Products. Seven industries reported no change in raw materials inventories in November compared to October.

Inventories %
Higher
%
Same
%
Lower
Net Index
Nov 2016 15 68 17 -2 49.0
Oct 2016 16 63 21 -5 47.5
Sep 2016 16 67 17 -1 49.5
Aug 2016 18 62 20 -2 49.0
Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 49 percent in November, which is 0.5 percentage point lower than the 49.5 percent reported in October, indicating that customers’ inventory levels are considered too low in November for the second consecutive month.

The four manufacturing industries reporting customers’ inventories as being too high during the month of November are: Fabricated Metal Products; Transportation Equipment; Primary Metals; and Petroleum & Coal Products. The eight industries reporting customers’ inventories as too low during November — listed in order — are: Textile Mills; Plastics & Rubber Products; Paper Products; Machinery; Chemical Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Computer & Electronic Products.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
Nov 2016 52 15 68 17 -2 49.0
Oct 2016 59 13 73 14 -1 49.5
Sep 2016 58 17 72 11 +6 53.0
Aug 2016 54 16 67 17 -1 49.5
Prices*

The ISM® Prices Index registered 54.5 percent in November, the same reading as reported in October, indicating an increase in raw materials prices for the ninth consecutive month. In November, 21 percent of respondents reported paying higher prices, 12 percent reported paying lower prices, and 67 percent of supply executives reported paying the same prices as in October. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the seven industries that reported paying increased prices for its raw materials in November — listed in order — are: Apparel, Leather & Allied Products; Fabricated Metal Products; Nonmetallic Mineral Products; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; and Plastics & Rubber Products. The five industries reporting paying lower prices during the month of November are: Petroleum & Coal Products; Machinery; Transportation Equipment; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. Six industries reported no change in raw materials prices in November compared to October.

Prices %
Higher
%
Same
%
Lower
Net Index
Nov 2016 21 67 12 +9 54.5
Oct 2016 25 59 16 +9 54.5
Sep 2016 20 66 14 +6 53.0
Aug 2016 19 68 13 +6 53.0
Backlog of Orders*

ISM®’s Backlog of Orders Index registered 49 percent in November, an increase of 3.5 percentage points when compared to the October reading of 45.5 percent, indicating contraction in order backlogs for the fifth consecutive month. Of the 87 percent of respondents who reported their backlog of orders, 21 percent reported greater backlogs, 23 percent reported smaller backlogs, and 56 percent reported no change from October.

The seven industries reporting growth in order backlogs in November — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Miscellaneous Manufacturing; and Primary Metals. The 11 industries reporting a decrease in order backlogs during November — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; Chemical Products; Machinery; and Plastics & Rubber Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
Nov 2016 87 21 56 23 -2 49.0
Oct 2016 88 16 59 25 -9 45.5
Sep 2016 87 19 61 20 -1 49.5
Aug 2016 88 18 55 27 -9 45.5
New Export Orders*

ISM®’s New Export Orders Index registered 52 percent in November, a decrease of 0.5 percentage point when compared to the 52.5 percent reported for October, indicating growth in new export orders for the ninth consecutive month.

The six industries reporting growth in new export orders in November — listed in order — are: Miscellaneous Manufacturing; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; and Machinery. The seven industries reporting a decrease in new export orders during November — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Paper Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; and Transportation Equipment.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
Nov 2016 82 13 78 9 +4 52.0
Oct 2016 79 12 81 7 +5 52.5
Sep 2016 76 15 74 11 +4 52.0
Aug 2016 78 16 73 11 +5 52.5
Imports*

ISM®’s Imports Index registered 50.5 percent in November, which is 1.5 percentage points below the October reading of 52 percent. This month’s reading indicates growth in imports for the second consecutive month.

The six industries reporting growth in imports during the month of November — listed in order — are: Furniture & Related Products; Computer & Electronic Products; Miscellaneous Manufacturing; Chemical Products; Fabricated Metal Products; and Machinery. The six industries reporting a decrease in imports during November — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
Nov 2016 82 11 79 10 +1 50.5
Oct 2016 81 11 82 7 +4 52.0
Sep 2016 81 12 74 14 -2 49.0
Aug 2016 83 8 78 14 -6 47.0

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures decreased in November by 3 days to 133 days. Average lead time for Production Materials decreased by 5 days to 59 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies remained the same at 31 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Nov 2016 20 10 12 17 23 18 133
Oct 2016 19 11 10 18 23 19 136
Sep 2016 18 12 9 16 30 15 132
Aug 2016 22 6 13 19 24 16 129
 
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Nov 2016 17 35 25 14 7 2 59
Oct 2016 12 38 24 16 7 3 64
Sep 2016 15 35 25 16 7 2 60
Aug 2016 15 38 22 15 8 2 60
 
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Nov 2016 40 34 18 7 1 0 31
Oct 2016 41 34 17 7 1 0 31
Sep 2016 38 35 18 9 0 0 31
Aug 2016 40 39 13 8 0 0 29
About This Report

The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

 

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About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 48,000 members around the world manage about $1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the newly launched ISM Mastery Model™. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®’s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. (ET)

The next Manufacturing ISM® Report On Business® featuring the December 2016 data will be released at 10:00 a.m. (ET) on Tuesday, January 3, 2017.

*Unless the NYSE is closed.

ISM Report on Business Published June 1, 2016

May 2016 Manufacturing ISM® Report On Business®

PMI® at 51.3%

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of May 2016.

PMI® at 51.3%

New Orders and Production Growing
Employment and Inventories Contracting
Supplier Deliveries Slower

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in May for the third consecutive month, while the overall economy grew for the 84th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The May PMI® registered 51.3 percent, an increase of 0.5 percentage point from the April reading of 50.8 percent. The New Orders Index registered 55.7 percent, a decrease of 0.1 percentage point from the April reading of 55.8 percent. The Production Index registered 52.6 percent, 1.6 percentage points lower than the April reading of 54.2 percent. The Employment Index registered 49.2 percent, the same reading as in April. Inventories of raw materials registered 45 percent, a decrease of 0.5 percentage point from the April reading of 45.5 percent. The Prices Index registered 63.5 percent, an increase of 4.5 percentage points from the April reading of 59 percent, indicating higher raw materials prices for the third consecutive month. Manufacturing registered growth in May for the third consecutive month, as 14 of our 18 industries reported an increase in new orders in May (down from 15 in April), and 12 of our 18 industries reported an increase in production in May (down from 15 in April).”

Of the 18 manufacturing industries, 12 are reporting growth in May in the following order: Wood Products; Textile Mills; Printing & Related Support Activities; Fabricated Metal Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; and Primary Metals. The six industries reporting contraction in May — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; and Furniture & Related Products.

WHAT RESPONDENTS ARE SAYING …
  • “Business conditions remain strong with the exception of South America. Continued expectation for a strong year even with the headwinds of currency and economic slowdown.” (Food, Beverage & Tobacco Products)
  • “Consistent sales growth in greater China, North Asia, Southeast Asia, Canada and Mexico. Flat for the Americas and Europe.” (Chemical Products)
  • “Slowdown in Chinese economy causing low orders.” (Computer & Electronic Products)
  • “Continued brisk order flow for our business.” (Fabricated Metal Products)
  • “Steady to slightly up production rates vs. prior month.” (Machinery)
  • “Business is still good, but slowing.” (Transportation Equipment)
  • “Business conditions are stable; demand is steady for our products.” (Miscellaneous Manufacturing)
  • “Our business remains to be strong, but many of my suppliers are telling me their business is flat.” (Plastics & Rubber Products)
  • “Oil & Gas continues to struggle to meet cost controls required in the new low-oil price environment.” (Petroleum & Coal Products)
  • “Market is improving steadily in both orders and pricing.” (Wood Products)
MANUFACTURING AT A GLANCE
MAY 2016
Index Series
Index
May
Series
Index
Apr
Percentage
Point
Change
Direction Rate
of
Change
Trend*
(Months)
PMI® 51.3 50.8 +0.5 Growing Faster 3
New Orders 55.7 55.8 -0.1 Growing Slower 5
Production 52.6 54.2 -1.6 Growing Slower 5
Employment 49.2 49.2 0.0 Contracting Same 6
Supplier Deliveries 54.1 49.1 +5.0 Slower From
Faster
1
Inventories 45.0 45.5 -0.5 Contracting Faster 11
Customers’ Inventories 50.0 46.0 +4.0 Unchanged From
Too Low
1
Prices 63.5 59.0 +4.5 Increasing Faster 3
Backlog of Orders 47.0 50.5 -3.5 Contracting From Growing 1
New Export Orders 52.5 52.5 0.0 Growing Same 3
Imports 50.0 50.0 0.0 Unchanged Same 2
OVERALL ECONOMY Growing Faster 84
Manufacturing Sector Growing Faster 3

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price

Aluminum (4); #1 Bundle Scrap (2); Copper (3); Corn; Crude Oil; Diesel (2); Electric Components; Gasoline; HDPE Resin (2); Oil (2); Petroleum Based Products; Polypropylene (4); Silver; Stainless Steel (2); Steel (5); Steel — Cold Rolled (2); Steel — Hot Rolled (4); and Structural Steel Tubing.

Commodities Down in Price

Corrugated Boxes.

Commodities in Short Supply

None.

Note: The number of consecutive months the commodity is listed is indicated after each item.


MAY 2016 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in May as the PMI® registered 51.3 percent, an increase of 0.5 percentage point from the April reading of 50.8 percent, indicating growth in manufacturing for the third consecutive month, following five consecutive months of contraction in manufacturing. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the May PMI® indicates growth for the 84th consecutive month in the overall economy, while indicating growth in the manufacturing sector for the third consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through May (50.3 percent) corresponds to a 2.2 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for May (51.3 percent) is annualized, it corresponds to a 2.6 percent increase in real GDP annually.”

THE LAST 12 MONTHS
Month PMI® Month PMI®
May 2016  51.3 Nov 2015  48.4
Apr 2016  50.8 Oct 2015  49.4
Mar 2016  51.8 Sep 2015  50.0
Feb 2016  49.5 Aug 2015  51.0
Jan 2016  48.2 Jul 2015  51.9
Dec 2015  48.0 Jun 2015  53.1
Average for 12 months – 50.3
High – 53.1
Low – 48.0

New Orders

ISM®’s New Orders Index registered 55.7 percent in May, which is a decrease of 0.1 percentage point when compared to the 55.8 percent reported for April, indicating growth in new orders for the fifth consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 14 industries reporting growth in new orders in May — listed in order — are: Textile Mills; Printing & Related Support Activities; Wood Products; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Chemical Products; Paper Products; and Nonmetallic Mineral Products. The four industries reporting a decrease in new orders during May are: Apparel, Leather & Allied Products; Transportation Equipment; Petroleum & Coal Products; and Furniture & Related Products.

New
Orders
%
Better
%
Same
%
Worse
Net Index
May 2016 32 51 17 +15 55.7
Apr 2016 38 45 17 +21 55.8
Mar 2016 32 56 12 +20 58.3
Feb 2016 25 56 19 +6 51.5

Production

ISM®’s Production Index registered 52.6 percent in May, which is a decrease of 1.6 percentage points when compared to the 54.2 percent reported for April, indicating growth in production in May for the fifth consecutive month. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The 12 industries reporting growth in production during the month of May — listed in order — are: Wood Products; Primary Metals; Paper Products; Fabricated Metal Products; Textile Mills; Printing & Related Support Activities; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Machinery. The six industries reporting a decrease in production during May — listed in order — are: Apparel, Leather & Allied Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; Furniture & Related Products; and Plastics & Rubber Products.

Production %
Better
%
Same
%
Worse
Net Index
May 2016 29 52 19 +10 52.6
Apr 2016 35 52 13 +22 54.2
Mar 2016 28 61 11 +17 55.3
Feb 2016 24 59 17 +7 52.8

Employment

ISM®’s Employment Index registered 49.2 percent in May, the same reading as reported for April, indicating contraction in employment for the sixth consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in May, the 10 industries reporting employment growth — listed in order — are: Textile Mills; Wood Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Primary Metals; Miscellaneous Manufacturing; Machinery; and Computer & Electronic Products. The six industries reporting a decrease in employment in May — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Chemical Products; Fabricated Metal Products; and Furniture & Related Products.

Employment %
Higher
%
Same
%
Lower
Net Index
May 2016 20 62 18 +2 49.2
Apr 2016 24 57 19 +5 49.2
Mar 2016 15 66 19 -4 48.1
Feb 2016 15 67 18 -3 48.5

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in May as the Supplier Deliveries Index registered 54.1 percent, which is 5 percentage points higher than the 49.1 percent reported for April. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The six industries reporting slower supplier deliveries in May — listed in order — are: Plastics & Rubber Products; Machinery; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Transportation Equipment. The two industries reporting faster supplier deliveries during May are: Primary Metals; and Chemical Products. Ten industries reported no change in supplier deliveries in May compared to April.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
May 2016 13 82 5 +8 54.1
Apr 2016 8 85 7 +1 49.1
Mar 2016 6 90 4 +2 50.2
Feb 2016 7 87 6 +1 49.7

Inventories*

The Inventories Index registered 45 percent in May, which is a decrease of 0.5 percentage point when compared to the 45.5 percent reported for April, indicating raw materials inventories are contracting in May for the 11th consecutive month at a faster rate than in April. An Inventories Index greater than 42.8 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The four industries reporting higher inventories in May are: Apparel, Leather & Allied Products; Wood Products; Computer & Electronic Products; and Fabricated Metal Products. The 13 industries reporting lower inventories in May — listed in order — are: Primary Metals; Textile Mills; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Chemical Products; Miscellaneous Manufacturing; Plastics & Rubber Products; and Printing & Related Support Activities.

Inventories %
Higher
%
Same
%
Lower
Net Index
May 2016 14 62 24 -10 45.0
Apr 2016 15 61 24 -9 45.5
Mar 2016 15 64 21 -6 47.0
Feb 2016 13 64 23 -10 45.0

Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 50 percent in May, which is an increase of 4 percentage points when compared to the 46 percent reported for April, indicating that customers’ inventory levels are unchanged in May relative to April.

The seven manufacturing industries reporting customers’ inventories as being too high during the month of May — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The seven industries reporting customers’ inventories as too low during May — listed in order — are: Textile Mills; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Computer & Electronic Products; Paper Products; Machinery; and Primary Metals.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
May 2016 60 16 68 16 0 50.0
Apr 2016 57 12 68 20 -8 46.0
Mar 2016 59 15 68 17 -2 49.0
Feb 2016 62 11 72 17 -6 47.0

Prices*

The ISM® Prices Index registered 63.5 percent in May, which is an increase of 4.5 percentage points when compared to the 59 percent reported for April, indicating an increase in raw materials for the third consecutive month. In May, 34 percent of respondents reported paying higher prices, 7 percent reported paying lower prices, and 59 percent of supply executives reported paying the same prices as in April. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the 13 industries that reported paying increased prices for its raw materials in May — listed in order — are: Fabricated Metal Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; Primary Metals; Electrical Equipment, Appliances & Components; Machinery; Food, Beverage & Tobacco Products; Paper Products; Transportation Equipment; Chemical Products; Furniture & Related Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The three industries reporting paying lower prices during the month of May are: Wood Products; Petroleum & Coal Products; and Textile Mills.

Prices %
Higher
%
Same
%
Lower
Net Index
May 2016 34 59 7 +27 63.5
Apr 2016 28 62 10 +18 59.0
Mar 2016 16 71 13 +3 51.5
Feb 2016 9 59 32 -23 38.5

Backlog of Orders*

ISM®’s Backlog of Orders Index registered 47 percent in May, a decrease of 3.5 percentage points when compared to the April reading of 50.5 percent, indicating contraction in order backlogs. Of the 85 percent of respondents who reported their backlog of orders, 17 percent reported greater backlogs, 23 percent reported smaller backlogs, and 60 percent reported no change from April.

The six industries reporting an increase in order backlogs in May — listed in order — are: Textile Mills; Printing & Related Support Activities; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. The 10 industries reporting a decrease in order backlogs during May — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Nonmetallic Mineral Products; and Paper Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
May 2016 85 17 60 23 -6 47.0
Apr 2016 87 24 53 23 +1 50.5
Mar 2016 89 21 60 19 +2 51.0
Feb 2016 86 19 59 22 -3 48.5

New Export Orders*

ISM®’s New Export Orders Index registered 52.5 percent in May, the same reading as in April. This month’s reading indicates growth in new export orders for the third consecutive month.

The six industries reporting growth in new export orders in May — listed in order — are: Wood Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Paper Products; Transportation Equipment; and Computer & Electronic Products. The six industries reporting a decrease in new export orders during May — listed in order — are: Primary Metals; Nonmetallic Mineral Products; Chemical Products; Fabricated Metal Products; Machinery; and Plastics & Rubber Products. Six industries reported no change in new export orders in May compared to April.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
May 2016 75 15 75 10 +5 52.5
Apr 2016 78 16 73 11 +5 52.5
Mar 2016 77 15 74 11 +4 52.0
Feb 2016 76 11 71 18 -7 46.5

Imports*

ISM®’s Imports Index registered 50 percent in May, the same reading as in April, indicating that imports in May are unchanged from April.

The six industries reporting growth in imports during the month of May — listed in order — are: Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Machinery; and Furniture & Related Products. The seven industries reporting a decrease in imports during May — listed in order — are: Primary Metals; Transportation Equipment; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Printing & Related Support Activities.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
May 2016 83 14 72 14 0 50.0
Apr 2016 79 14 72 14 0 50.0
Mar 2016 81 10 79 11 -1 49.5
Feb 2016 81 10 78 12 -2 49.0

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures increased in May by 7 days to 127 days. Average lead time for Production Materials increased by 4 days to 63 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased by 1 day to 30 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
May 2016 24 8 12 15 25 16 127
Apr 2016 23 8 9 23 24 13 120
Mar 2016 26 5 14 16 25 14 121
Feb 2016 22 7 12 21 22 16 127
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
May 2016 16 35 24 15 7 3 63
Apr 2016 15 37 21 18 8 1 59
Mar 2016 15 34 25 16 8 2 62
Feb 2016 14 39 25 14 6 2 58
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
May 2016 41 37 14 7 1 0 30
Apr 2016 37 41 15 7 0 0 29
Mar 2016 42 37 15 5 1 0 29
Feb 2016 43 37 16 3 1 0 27

About This Report

The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business®monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

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About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 48,000 members around the world manage about $1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the newly launched ISM Mastery Model. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®‘s website at www.instituteforsupplymanagement.org on the first business day* of every month after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the June 2016 data will be released at 10:00 a.m. (ET) on Friday, July 1, 2016.

*Unless the NYSE is closed.

ISM Report on Business April 1, 2016

March 2016 Manufacturing ISM® Report On Business®

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of March 2016.

PMI® at 51.8%
New Orders and Production Growing
Employment and Inventories Contracting
Supplier Deliveries Slower

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in March for the first time in the last six months, while the overall economy grew for the 82nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The March PMI® registered 51.8 percent, an increase of 2.3 percentage points from the February reading of 49.5 percent. The New Orders Index registered 58.3 percent, an increase of 6.8 percentage points from the February reading of 51.5 percent. The Production Index registered 55.3 percent, 2.5 percentage points higher than the February reading of 52.8 percent. The Employment Index registered 48.1 percent, 0.4 percentage point below the February reading of 48.5 percent. Inventories of raw materials registered 47 percent, an increase of 2 percentage points above the February reading of 45 percent. The Prices Index registered 51.5 percent, an increase of 13 percentage points above the February reading of 38.5 percent, indicating higher raw materials prices for the first time since October 2014. Manufacturing registered growth in March for the first time since August 2015, as 12 of our 18 industries reported sector growth, and 13 of our 18 industries reported an increase in new orders in March.”

Of the 18 manufacturing industries, 12 are reporting growth in March in the following order: Printing & Related Support Activities; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; Paper Products; Primary Metals; and Computer & Electronic Products. The five industries reporting contraction in March are: Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; and Petroleum & Coal Products.

 

WHAT RESPONDENTS ARE SAYING …
  • “Unemployment rate is low in our county, making it hard to find workers. We are understaffed and running lots of overtime.” (Plastics & Rubber Products)
  • “Business in telecom is booming. Fiber plant is at capacity.” (Chemical Products)
  • “Current trends remain steady. No issues with delivery or costs.” (Computer & Electronic Products)
  • “Capital equipment sales are steady.” (Fabricated Metal Products)
  • “Requests for proposals for new equipment [are] very strong.” (Machinery)
  • “Government is spending again. Have received delivery orders.” (Transportation Equipment)
  • “Things are starting to pick up. Our business is seasonal and it is that time of year.” (Printing & Related Support Activities)
  • “Business conditions are stable, little change from last month.” (Miscellaneous Manufacturing)
  • “Incoming sales are improving.” (Furniture & Related Products)
  • “Our business is still going strong.” (Primary Metals)
MANUFACTURING AT A GLANCE
MARCH 2016

Index

Series
Index
Mar
Series
Index
Feb
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI® 51.8 49.5 +2.3 Growing From
Contracting
1
New Orders 58.3 51.5 +6.8 Growing Faster 3
Production 55.3 52.8 +2.5 Growing Faster 3
Employment 48.1 48.5 -0.4 Contracting Faster 4
Supplier Deliveries 50.2 49.7 +0.5 Slower From
Faster
1
Inventories 47.0 45.0 +2.0 Contracting Slower 9
Customers’ Inventories 49.0 47.0 +2.0 Too Low Slower 2
Prices 51.5 38.5 +13.0 Increasing From
Decreasing
1
Backlog of Orders 51.0 48.5 +2.5 Growing From
Contracting
1
Exports 52.0 46.5 +5.5 Growing From
Contracting
1
Imports 49.5 49.0 +0.5 Contracting Slower 2
OVERALL ECONOMY Growing Faster 82
Manufacturing Sector Growing From
Contracting
1

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

 

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

 

Commodities Up in Price

Aluminum (2); #1 Busheling Scrap; Copper; Crude Oil; Iron; Polypropylene (2); Steel* (3); and Steel — Hot Rolled (2).

 

Commodities Down in Price

Corrugate; Diesel (4); Plastic Resin; Polyethylene Resin; and Steel* (9).

 

Commodities in Short Supply

Carbon Dioxide.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

 


MARCH 2016 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in March as the PMI® registered 51.8 percent, an increase of 2.3 percentage points from the February reading of 49.5 percent, indicating growth in manufacturing for the first time since August 2015 when the PMI® registered 51.0 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March PMI® indicates growth for the 82nd consecutive month in the overall economy, while indicating growth in the manufacturing sector for the first time in the last six months. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through March (49.8 percent) corresponds to a 2.1 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for March (51.8 percent) is annualized, it corresponds to a 2.7 percent increase in real GDP annually.”

 

THE LAST 12 MONTHS
Month PMI® Month PMI®
Mar 2016  51.8 Sep 2015  50.0
Feb 2016  49.5 Aug 2015  51.0
Jan 2016  48.2 Jul 2015  51.9
Dec 2015  48.0 Jun 2015  53.1
Nov 2015  48.4 May 2015  53.1
Oct 2015  49.4 Apr 2015  51.6
Average for 12 months – 50.5
High – 53.1
Low – 48.0

 

New Orders

ISM®’s New Orders Index registered 58.3 percent in March, which is an increase of 6.8 percentage points when compared to the 51.5 percent reported for February, indicating growth in new orders for the third consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 13 industries reporting growth in new orders in March — listed in order — are: Furniture & Related Products; Textile Mills; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Chemical Products; Printing & Related Support Activities; Machinery; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Paper Products; and Fabricated Metal Products. The three industries reporting a decrease in new orders during March are: Apparel, Leather & Allied Products; Computer & Electronic Products; and Transportation Equipment.

New
Orders
%
Better
%
Same
%
Worse
Net Index
Mar 2016 32 56 12 +20 58.3
Feb 2016 25 56 19 +6 51.5
Jan 2016 26 49 25 +1 51.5
Dec 2015 20 51 29 -9 48.8

 

Production

ISM®’s Production Index registered 55.3 percent in March, which is an increase of 2.5 percentage points when compared to the 52.8 percent reported for February, indicating growth in production in March for the third consecutive month. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The 12 industries reporting growth in production during the month of March — listed in order — are: Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Machinery; Printing & Related Support Activities; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Chemical Products; Food, Beverage & Tobacco Products; Paper Products; and Fabricated Metal Products. The two industries reporting a decrease in production during March are: Apparel, Leather & Allied Products; and Transportation Equipment.

Production %
Better
%
Same
%
Worse
Net Index
Mar 2016 28 61 11 +17 55.3
Feb 2016 24 59 17 +7 52.8
Jan 2016 22 51 27 -5 50.2
Dec 2015 19 54 27 -8 49.9

 

Employment

ISM®’s Employment Index registered 48.1 percent in March, which is a decrease of 0.4 percentage point when compared to the 48.5 percent reported for February, indicating contraction in employment for the fourth consecutive month at a faster rate of contraction than in February. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in March, the six industries reporting employment growth — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Furniture & Related Products; Machinery; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The nine industries reporting a decrease in employment in March — listed in order — are: Petroleum & Coal Products; Paper Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Primary Metals; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products.

Employment %
Higher
%
Same
%
Lower
Net Index
Mar 2016 15 66 19 -4 48.1
Feb 2016 15 67 18 -3 48.5
Jan 2016 11 67 22 -11 45.9
Dec 2015 10 73 17 -7 48.0

 

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in March as the Supplier Deliveries Index registered 50.2 percent, which is 0.5 percentage point higher than the 49.7 percent reported for February. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The six industries reporting slower supplier deliveries in March — listed in order — are: Paper Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; and Transportation Equipment. The four industries reporting faster supplier deliveries during March are: Primary Metals; Machinery; Plastics & Rubber Products; and Chemical Products. Eight industries reported no change in supplier deliveries in March compared to February.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
Mar 2016 6 90 4 +2 50.2
Feb 2016 7 87 6 +1 49.7
Jan 2016 7 87 6 +1 50.0
Dec 2015 7 84 9 -2 49.8

 

Inventories*

The Inventories Index registered 47 percent in March, which is an increase of 2 percentage points when compared to the 45 percent reported for February, indicating raw materials inventories are contracting in March for the ninth consecutive month at a slower rate than in February. An Inventories Index greater than 42.8 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The four industries reporting higher inventories in March are: Printing & Related Support Activities; Paper Products; Plastics & Rubber Products; and Computer & Electronic Products. The 12 industries reporting lower inventories in March — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Furniture & Related Products; Electrical Equipment, Appliances & Components; Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Miscellaneous Manufacturing.

Inventories %
Higher
%
Same
%
Lower
Net Index
Mar 2016 15 64 21 -6 47.0
Feb 2016 13 64 23 -10 45.0
Jan 2016 13 61 26 -13 43.5
Dec 2015 14 59 27 -13 43.5

 

Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 49 percent in March, which is an increase of 2 percentage points when compared to the 47 percent reported for February, indicating that customers’ inventories are considered to be too low in March for the second consecutive month.

The five manufacturing industries reporting customers’ inventories as being too high during the month of March are: Fabricated Metal Products; Furniture & Related Products; Paper Products; Computer & Electronic Products; and Transportation Equipment. The eight industries reporting customers’ inventories as too low during March — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Primary Metals; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; Chemical Products; and Plastics & Rubber Products.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
Mar 2016 59 15 68 17 -2 49.0
Feb 2016 62 11 72 17 -6 47.0
Jan 2016 63 17 69 14 +3 51.5
Dec 2015 63 18 67 15 +3 51.5

 

Prices*

The ISM® Prices Index registered 51.5 percent in March, which is an increase of 13 percentage points when compared to the 38.5 percent reported for February, indicating an increase in raw materials for the first time since October 2014. In March, 16 percent of respondents reported paying higher prices, 13 percent reported paying lower prices, and 71 percent of supply executives reported paying the same prices as in February. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the 10 industries that reported paying increased prices for its raw materials in March — listed in order — are: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Fabricated Metal Products; Paper Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Primary Metals; Transportation Equipment; Machinery; and Computer & Electronic Products. The seven industries reporting paying lower prices during the month of March — listed in order — are: Wood Products; Textile Mills; Furniture & Related Products; Chemical Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Plastics & Rubber Products.

Prices %
Higher
%
Same
%
Lower
Net Index
Mar 2016 16 71 13 +3 51.5
Feb 2016 9 59 32 -23 38.5
Jan 2016 5 57 38 -33 33.5
Dec 2015 4 59 37 -33 33.5

 

Backlog of Orders*

ISM®’s Backlog of Orders Index registered 51 percent in March, an increase of 2.5 percentage points as compared to the February reading of 48.5 percent, indicating growth in order backlogs for the first time since May 2015. Of the 89 percent of respondents who reported their backlog of orders, 21 percent reported greater backlogs, 19 percent reported smaller backlogs, and 60 percent reported no change from February.

The seven industries reporting an increase in order backlogs in March — listed in order — are: Furniture & Related Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; and Fabricated Metal Products. The seven industries reporting a decrease in order backlogs during March — listed in order — are: Apparel, Leather & Allied Products; Transportation Equipment; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Machinery; Plastics & Rubber Products; and Paper Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
Mar 2016 89 21 60 19 +2 51.0
Feb 2016 86 19 59 22 -3 48.5
Jan 2016 88 17 52 31 -14 43.0
Dec 2015 88 12 58 30 -18 41.0

 

New Export Orders*

ISM®’s New Export Orders Index registered 52 percent in March, which is an increase of 5.5 percentage points when compared to the February reading of 46.5 percent. This month’s reading indicates growth in new export orders and is the highest reading since December 2014 when the New Export Orders Index also registered 52 percent.

The seven industries reporting growth in new export orders in March — listed in order — are: Wood Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Chemical Products; Fabricated Metal Products; Primary Metals; and Machinery. The 10 industries reporting a decrease in new export orders during March — listed in order — are: Textile Mills; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Plastics & Rubber Products; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Nonmetallic Mineral Products.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
Mar 2016 77 15 74 11 +4 52.0
Feb 2016 76 11 71 18 -7 46.5
Jan 2016 74 9 76 15 -6 47.0
Dec 2015 78 14 74 12 +2 51.0

 

Imports*

ISM®’s Imports Index registered 49.5 percent in March, which is 0.5 percentage point higher than the 49 percent reported in February, and indicates contraction in imports in March for the second consecutive month.

The five industries reporting growth in imports during the month of March are: Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; Machinery; and Miscellaneous Manufacturing. The eight industries reporting a decrease in imports during March — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Paper Products; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; and Fabricated Metal Products.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
Mar 2016 81 10 79 11 -1 49.5
Feb 2016 81 10 78 12 -2 49.0
Jan 2016 82 14 74 12 +2 51.0
Dec 2015 81 8 75 17 -9 45.5

 

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

 

Buying Policy

Average commitment lead time for Capital Expenditures decreased in March by 6 days to 121 days. Average lead time for Production Materials increased by 4 days to 62 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased by 2 days to 29 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2016 26 5 14 16 25 14 121
Feb 2016 22 7 12 21 22 16 127
Jan 2016 24 6 13 20 20 17 126
Dec 2015 23 9 12 15 25 16 127
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2016 15 34 25 16 8 2 62
Feb 2016 14 39 25 14 6 2 58
Jan 2016 14 37 24 15 9 1 60
Dec 2015 15 39 24 14 6 2 57
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2016 42 37 15 5 1 0 29
Feb 2016 43 37 16 3 1 0 27
Jan 2016 41 37 16 6 0 0 28
Dec 2015 42 36 17 5 0 0 28

 

About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

 

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 48,000 members around the world manage about $1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the newly launched ISM Mastery Model. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

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The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®‘s website at www.instituteforsupplymanagement.org on the first business day* of every month after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the April 2016 data will be released at 10:00 a.m. (ET) on Monday, May 2, 2016.

*Unless the NYSE is closed.

ISM Report on Business March 2015

FOR RELEASE: April 1, 2015

 

Contact:   Kristina Cahill
Report On Business® Analyst
ISM®, ROB/Research
Tempe, Arizona
800/888-6276, Ext. 3015
E-mail: kcahill@ism.ws

March 2015 Manufacturing ISM® Report On Business®


DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of March 2015.

 

PMI® at 51.5%

New Orders, Production and Inventories Growing
Employment Unchanged
Supplier Deliveries Slowing

 

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in March for the 27th consecutive month, and the overall economy grew for the 70th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The March PMI® registered 51.5 percent, a decrease of 1.4 percentage points from February’s reading of 52.9 percent. The New Orders Index registered 51.8 percent, a decrease of 0.7 percentage point from the reading of 52.5 percent in February. The Production Index registered 53.8 percent, 0.1 percentage point above the February reading of 53.7 percent. The Employment Index registered 50 percent, 1.4 percentage points below the February reading of 51.4 percent, reflecting unchanged employment levels from February. Inventories of raw materials registered 51.5 percent, a decrease of 1 percentage point from the February reading of 52.5 percent. The Prices Index registered 39 percent, 4 percentage points above the February reading of 35 percent, indicating lower raw materials prices for the fifth consecutive month. Comments from the panel refer to continuing challenges from the West Coast port issue, lower oil prices having both positive and negative impacts depending upon the industry, residual effects of the harsh winter, higher costs of healthcare premiums, and challenges associated with the stronger dollar on international business.”

Of the 18 manufacturing industries, 10 are reporting growth in March in the following order: Paper Products; Wood Products; Transportation Equipment; Fabricated Metal Products; Nonmetallic Mineral Products; Machinery; Chemical Products; Primary Metals; Food, Beverage & Tobacco Products; and Computer & Electronic Products. The seven industries reporting contraction in March — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; and Furniture & Related Products.

 

WHAT RESPONDENTS ARE SAYING …
  • “Falling energies have helped on the cost side while sales are getting a boost through improvements in consumer disposable income.” (Food, Beverage & Tobacco Products)
  • “Our business is still strong and on projection. Dollar strength is challenging for our international business.” (Fabricated Metal Products)
  • “Business is still extremely strong.” (Transportation Equipment)
  • “Oil prices impacting drilling and project activity. Pursuing cost reductions from suppliers for a wide variety of goods and services.” (Petroleum & Coal Products)
  • “Business really starting to slow down. Oil pricing is having a major effect on energy markets.” (Computer & Electronic Products)
  • “Steady Q1 demand but somewhat interrupted by weather.” (Primary Metals)
  • “Operating costs are higher due to increases in healthcare premiums.” (Miscellaneous Manufacturing)
  • “March business is improving over Jan-Feb, thawing out of this crazy winter.” (Paper Products)
  • “Dealing with ongoing delivery issues associated with congestion at the U.S. West Coast and Vancouver ports.” (Machinery)
  • “Congestion at the West Coast ports delaying incoming products.” (Textile Mills)
MANUFACTURING AT A GLANCE
MARCH 2015
Index Series
Index
Mar
Series
Index
Feb
Percentage
Point
Change
Direction Rate
of
Change
Trend*
(Months)
PMI® 51.5 52.9 -1.4 Growing Slower 27
New Orders 51.8 52.5 -0.7 Growing Slower 28
Production 53.8 53.7 +0.1 Growing Faster 31
Employment 50.0 51.4 -1.4 Unchanged From Growing 1
Supplier Deliveries 50.5 54.3 -3.8 Slowing Slower 22
Inventories 51.5 52.5 -1.0 Growing Slower 3
Customers’ Inventories 45.5 46.5 -1.0 Too Low Faster 4
Prices 39.0 35.0 +4.0 Decreasing Slower 5
Backlog of Orders 49.5 51.5 -2.0 Contracting From Growing 1
Exports 47.5 48.5 -1.0 Contracting Faster 3
Imports 52.5 54.0 -1.5 Growing Slower 26
OVERALL ECONOMY Growing Slower 70
Manufacturing Sector Growing Slower 27

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

 

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

 

Commodities Up in Price

Dairy; Gasoline; Polypropylene Resin; and Steel — Hot Rolled*.

 

Commodities Down in Price

Aluminum (4); Carbon Steel (3); Copper (8); HDPE Resin (4); Nickel (3); Oil (4); PET Resin (5); Plastic Resin (4); Scrap Steel (4); Stainless Steel (5); Steel (4); Steel — Cold Rolled; and Steel — Hot Rolled (5)*.

 

Commodities in Short Supply

The only commodity listed in short supply during March is Trucking Services.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

 


MARCH 2015 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in March as the PMI® registered 51.5 percent, a decrease of 1.4 percentage points when compared to February’s reading of 52.9 percent, indicating growth in manufacturing for the 27th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March PMI® indicates growth for the 70th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 27th consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through March (52.6 percent) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for March (51.5 percent) is annualized, it corresponds to a 2.6 percent increase in real GDP annually.”

 

THE LAST 12 MONTHS
Month PMI® Month PMI®
Mar 2015  51.5 Sep 2014  56.1
Feb 2015  52.9 Aug 2014  58.1
Jan 2015  53.5 Jul 2014  56.4
Dec 2014  55.1 Jun 2014  55.7
Nov 2014  57.6 May 2014  55.6
Oct 2014  57.9 Apr 2014  55.3
Average for 12 months – 55.5
High – 58.1
Low – 51.5

 

New Orders

ISM®’s New Orders Index registered 51.8 percent in March, a decrease of 0.7 percentage point when compared to the February reading of 52.5 percent, indicating growth in new orders for the 28th consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The nine industries reporting growth in new orders in March — listed in order — are: Wood Products; Paper Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; Furniture & Related Products; Chemical Products; and Computer & Electronic Products. The eight industries reporting a decrease in new orders during March — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Primary Metals; and Plastics & Rubber Products.

New
Orders
%
Better
%
Same
%
Worse
Net Index
Mar 2015 27 58 15 +12 51.8
Feb 2015 28 55 17 +11 52.5
Jan 2015 24 59 17 +7 52.9
Dec 2014 25 57 18 +7 57.8

 

Production

ISM®’s Production Index registered 53.8 percent in March, which is an increase of 0.1 percentage point when compared to the 53.7 percent reported in February, indicating growth in production for the 31st consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The nine industries reporting growth in production during the month of March — listed in order — are: Paper Products; Transportation Equipment; Nonmetallic Mineral Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; Machinery; and Computer & Electronic Products. The five industries reporting a decrease in production during March are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; and Plastics & Rubber Products.

Production %
Better
%
Same
%
Worse
Net Index
Mar 2015 25 64 11 +14 53.8
Feb 2015 27 57 16 +11 53.7
Jan 2015 24 61 15 +9 56.5
Dec 2014 24 59 17 +7 57.7

 

Employment

ISM®’s Employment Index registered 50 percent in March, which is a decrease of 1.4 percentage points when compared to the 51.4 percent reported in February. The March reading of 50 percent indicates that there was no change in manufacturing employment relative to February, and follows 21 consecutive months of growth in employment. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in March, seven industries reported employment growth in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Machinery; and Plastics & Rubber Products. The seven industries reporting a decrease in employment in March — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.

Employment %
Higher
%
Same
%
Lower
Net Index
Mar 2015 17 68 15 +2 50.0
Feb 2015 18 68 14 +4 51.4
Jan 2015 15 75 10 +5 54.1
Dec 2014 19 70 11 +8 56.0

 

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations slowed in March at a slower rate as the Supplier Deliveries Index registered 50.5 percent. This month’s reading is 3.8 percentage points lower than the 54.3 percent reported in February. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 11 industries reporting slower supplier deliveries in March — listed in order — are: Textile Mills; Wood Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Furniture & Related Products; Transportation Equipment; Miscellaneous Manufacturing; Machinery; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The four industries reporting faster supplier deliveries during March are: Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; and Paper Products.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
Mar 2015 14 76 10 +4 50.5
Feb 2015 17 75 8 +9 54.3
Jan 2015 14 80 6 +8 52.9
Dec 2014 17 80 3 +14 58.6

 

Inventories*

The Inventories Index registered 51.5 percent in March, which is 1 percentage point lower than the 52.5 percent registered in February, indicating raw materials inventories are growing for the third consecutive month. An Inventories Index greater than 42.9 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The eight industries reporting higher inventories in March — listed in order — are: Printing & Related Support Activities; Primary Metals; Machinery; Miscellaneous Manufacturing; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; and Transportation Equipment. The five industries reporting lower inventories in March are: Plastics & Rubber Products; Apparel, Leather & Allied Products; Textile Mills; Furniture & Related Products; and Paper Products.

Inventories %
Higher
%
Same
%
Lower
Net Index
Mar 2015 15 73 12 +3 51.5
Feb 2015 21 63 16 +5 52.5
Jan 2015 21 60 19 +2 51.0
Dec 2014 17 57 26 -9 45.5

 

Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 45.5 percent in March, a decrease of 1 percentage point from February when customers’ inventories registered 46.5 percent. March’s reading indicates that customers’ inventories are considered to be too low, and lower than in February.

The three manufacturing industries reporting customers’ inventories as being too high during the month of March are: Electrical Equipment, Appliances & Components; Primary Metals; and Food, Beverage & Tobacco Products. The eight industries reporting customers’ inventories as too low during March — listed in order — are: Transportation Equipment; Paper Products; Furniture & Related Products; Plastics & Rubber Products; Machinery; Chemical Products; Computer & Electronic Products; and Fabricated Metal Products.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
Mar 2015 60 12 67 21 -9 45.5
Feb 2015 65 12 69 19 -7 46.5
Jan 2015 62 9 67 24 -15 42.5
Dec 2014 62 10 69 21 -11 44.5

 

Prices*

The ISM® Prices Index registered 39 percent in March, an increase of 4 percentage points when compared to the February reading of 35 percent, indicating a decrease in raw materials prices for the fifth consecutive month. In March, 10 percent of respondents reported paying higher prices, 32 percent reported paying lower prices, and 58 percent of supply executives reported paying the same prices as in February. A Prices Index above 52.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the two industries reporting paying increased prices for its raw materials in March are: Food, Beverage & Tobacco Products; and Computer & Electronic Products. The 14 industries reporting paying lower prices during the month of March — listed in order — are: Paper Products; Petroleum & Coal Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Textile Mills; Fabricated Metal Products; Machinery; Furniture & Related Products; Plastics & Rubber Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; and Primary Metals.

Prices %
Higher
%
Same
%
Lower
Net Index
Mar 2015 10 58 32 -22 39.0
Feb 2015 8 54 38 -30 35.0
Jan 2015 11 48 41 -30 35.0
Dec 2014 12 53 35 -23 38.5

 

Backlog of Orders*

ISM®’s Backlog of Orders Index registered 49.5 percent in March, which is 2 percentage points lower than the 51.5 percent reported in February, indicating contraction in order backlogs following one month of expansion in order backlogs. Of the 84 percent of respondents who reported their backlog of orders, 18 percent reported greater backlogs, 19 percent reported smaller backlogs, and 63 percent reported no change from February.

The six industries reporting increased order backlogs in March — listed in order — are: Wood Products; Fabricated Metal Products; Machinery; Nonmetallic Mineral Products; Chemical Products; and Transportation Equipment. The nine industries reporting a decrease in order backlogs during March — listed in order — are: Textile Mills; Plastics & Rubber Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Paper Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; and Primary Metals.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
Mar 2015 84 18 63 19 -1 49.5
Feb 2015 86 23 57 20 +3 51.5
Jan 2015 87 18 56 26 -8 46.0
Dec 2014 87 25 55 20 +5 52.5

 

New Export Orders*

ISM®’s New Export Orders Index registered 47.5 percent in March, which is 1 percentage point lower than the 48.5 percent reported in February. March’s reading reflects the third consecutive month of contraction in the level of exports, following 25 consecutive months of growth in new export orders.

The five industries reporting growth in new export orders in March are: Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; and Miscellaneous Manufacturing. The eight industries reporting a decrease in new export orders during March — listed in order — are: Textile Mills; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Transportation Equipment; Paper Products; and Chemical Products.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
Mar 2015 73 10 75 15 -5 47.5
Feb 2015 74 11 75 14 -3 48.5
Jan 2015 77 10 79 11 -1 49.5
Dec 2014 76 14 76 10 +4 52.0

 

Imports*

ISM®’s Imports Index registered 52.5 percent in March, which is 1.5 percentage points lower than the 54 percent reported in February. This month’s reading represents 26 consecutive months of growth in imports.

The eight industries reporting growth in imports during the month of March — listed in order — are: Textile Mills; Primary Metals; Machinery; Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Furniture & Related Products. The five industries reporting a decrease in imports during March are: Nonmetallic Mineral Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Food, Beverage & Tobacco Products.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
Mar 2015 75 17 71 12 +5 52.5
Feb 2015 75 17 74 9 +8 54.0
Jan 2015 76 16 79 5 +11 55.5
Dec 2014 78 18 74 8 +10 55.0

 

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

 

Buying Policy

Average commitment lead time for Capital Expenditures increased 4 days to 136 days. Average lead time for Production Materials decreased 1 day to 63 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies remained unchanged at 26 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2015 27 4 9 18 22 20 136
Feb 2015 27 6 11 14 23 19 132
Jan 2015 28 6 11 16 22 17 125
Dec 2014 26 6 11 17 24 16 126
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2015 15 36 23 16 7 3 63
Feb 2015 19 32 23 14 9 3 64
Jan 2015 17 36 22 16 7 2 59
Dec 2014 13 41 22 13 8 3 63
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Mar 2015 49 31 15 4 1 0 26
Feb 2015 45 35 15 5 0 0 26
Jan 2015 45 37 11 6 1 0 27
Dec 2014 47 33 14 5 1 0 27

 

About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

 

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® in excess of 43.1 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.1 percent, it is generally declining. The distance from 50 percent or 43.1 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

About Institute for Supply Management®

Founded in 1915 as the first supply management institute in the world, Institute for Supply Management® (ISM®) is committed to advancing the practice of supply chain management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. This year, ISM celebrates 100 years of leading, innovating and guiding the profession through the renowned ISM Report On Business®, highly regarded certification programs, and industry-standard training and educational resources. ISM is a not-for-profit organization with global influence, serving supply chain professionals in more than 90 countries. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®‘s website at www.ism.ws on the first business day* of every month after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the April 2015 data will be released at 10:00 a.m. (ET) on Friday, May 1, 2015.

*Unless the NYSE is closed.

 

Manufacturing ISM Report On Business

 

FOR RELEASE: September 1, 2015

 

PDF Download of this month’s report

Contact:   Kristina Cahill
Report On Business® Analyst
ISM®, ROB/Research
Tempe, Arizona
800/888-6276, Ext. 3015
E-mail: kcahill@instituteforsupplymanagement.org

 

August 2015 Manufacturing ISM® Report On Business®


DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of August 2015.

PMI® at 51.1%

New Orders, Production, and Employment Growing
Supplier Deliveries Slower
Inventories Contracting

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in August for the 32nd consecutive month, and the overall economy grew for the 75th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The August PMI® registered 51.1 percent, a decrease of 1.6 percentage points from the July reading of 52.7 percent. The New Orders Index registered 51.7 percent, a decrease of 4.8 percentage points from the reading of 56.5 percent in July. The Production Index registered 53.6 percent, 2.4 percentage points below the July reading of 56 percent. The Employment Index registered 51.2 percent, 1.5 percentage points below the July reading of 52.7 percent. Inventories of raw materials registered 48.5 percent, a decrease of 1 percentage point from the July reading of 49.5 percent. The Prices Index registered 39 percent, down 5 percentage points from the July reading of 44 percent, indicating lower raw materials prices for the 10th consecutive month. The New Export Orders Index registered 46.5 percent, down 1.5 percentage points from the July reading of 48 percent. Comments from the panel reflect a mix of modest to strong growth depending upon the specific industry, the positive impact of lower raw materials prices, but also a continuing concern over export growth.”

Of the 18 manufacturing industries, 10 are reporting growth in August in the following order: Textile Mills; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Fabricated Metal Products; Plastics & Rubber Products; and Machinery. The six industries reporting contraction in August — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Computer & Electronic Products; and Transportation Equipment.

WHAT RESPONDENTS ARE SAYING …
  • “Falling crude oil prices are benefiting all resin based purchases as well as positively impacting fuel surcharges for inbound products.” (Food, Beverage & Tobacco Products)
  • “We are oversold.” (Paper Products)
  • “Business is still strong but has slowed slightly.” (Transportation Equipment)
  • “Modest growth slightly ahead of GDP. Optimistic for the remainder of the year as we have little international exposure.” (Chemical Products)
  • “FX [Foreign Exchange] continues to be a challenge, especially in Europe. Overall though, the mood is fairly upbeat regarding H2 [second half of 2015] as we ramp up for a new product launch.” (Computer & Electronic Products)
  • “Our business is good due to the increase in commercial construction.” (Fabricated Metal Products)
  • “Raw metals price decreases will impact our business favorably.” (Miscellaneous Manufacturing)
  • “Business is guarded but steady. Margins are tight. Markets are very competitive. China is lackluster.” (Wood Products)
  • “Automotive companies are investing heavily in upgrading their equipment.” (Machinery)
  • “Business is strong and doing well. Labor continues to be a struggle to find.” (Furniture and Related Products)
MANUFACTURING AT A GLANCE
AUGUST 2015

Index

Series
Index
Aug
Series
Index
Jul
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI® 51.1 52.7 -1.6 Growing Slower 32
New Orders 51.7 56.5 -4.8 Growing Slower 33
Production 53.6 56.0 -2.4 Growing Slower 36
Employment 51.2 52.7 -1.5 Growing Slower 4
Supplier Deliveries 50.7 48.9 +1.8 Slowing From Faster 1
Inventories 48.5 49.5 -1.0 Contracting Faster 2
Customers’ Inventories 53.0 44.0 +9.0 Too High From
Too Low
1
Prices 39.0 44.0 -5.0 Decreasing Faster 10
Backlog of Orders 46.5 42.5 +4.0 Contracting Slower 3
Exports 46.5 48.0 -1.5 Contracting Faster 3
Imports 51.5 52.0 -0.5 Growing Slower 31
OVERALL ECONOMY Growing Slower 75
Manufacturing Sector Growing Slower 32

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price

Plastic Products*.

Commodities Down in Price

Aluminum (9); Copper (2); Crude Oil; Diesel Fuel; HDPE Resin; Nickel (2); Oil; Plastic Products*; Plastic Resins; Scrap Metal; Stainless Steel (10); Steel (2); and Steel — Cold Rolled (3).

Commodities in Short Supply

None.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.


AUGUST 2015 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in August as the PMI® registered 51.1 percent, a decrease of 1.6 percentage points from the July reading of 52.7 percent, indicating growth in manufacturing for the 32nd consecutive month. The August PMI reading is the lowest since May 2013 when the PMI registered 50.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August PMI® indicates growth for the 75th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 32nd consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through August (52.4 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for August (51.1 percent) is annualized, it corresponds to a 2.5 percent increase in real GDP annually.”

THE LAST 12 MONTHS
Month PMI® Month PMI®
Aug 2015  51.1 Feb 2015  52.9
Jul 2015  52.7 Jan 2015  53.5
Jun 2015  53.5 Dec 2014  55.1
May 2015  52.8 Nov 2014  57.6
Apr 2015  51.5 Oct 2014  57.9
Mar 2015  51.5 Sep 2014  56.1
Average for 12 months – 53.9
High – 57.9
Low – 51.1
New Orders

ISM®’s New Orders Index registered 51.7 percent in August, a decrease of 4.8 percentage points when compared to the July reading of 56.5 percent, indicating growth in new orders for the 33rd consecutive month, but at a slower rate than in July. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The seven industries reporting growth in new orders in August — listed in order — are: Textile Mills; Plastics & Rubber Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The seven industries reporting a decrease in new orders during August — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Petroleum & Coal Products; Machinery; and Fabricated Metal Products.

New
Orders
%
Better
%
Same
%
Worse
Net Index
Aug 2015 25 51 24 +1 51.7
Jul 2015 25 55 20 +5 56.5
Jun 2015 29 51 20 +9 56.0
May 2015 29 57 14 +15 55.8
Production

ISM®’s Production Index registered 53.6 percent in August, which is a decrease of 2.4 percentage points when compared to the 56 percent reported in July, indicating growth in production for the 36th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The eight industries reporting growth in production during the month of August — listed in order — are: Textile Mills; Plastics & Rubber Products; Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Chemical Products. The five industries reporting a decrease in production during August are: Primary Metals; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; and Transportation Equipment.

Production %
Better
%
Same
%
Worse
Net Index
Aug 2015 24 57 19 +5 53.6
Jul 2015 22 63 15 +7 56.0
Jun 2015 24 59 17 +7 54.0
May 2015 27 62 11 +16 54.5
Employment

ISM®’s Employment Index registered 51.2 percent in August, which is a decrease of 1.5 percentage points when compared to the 52.7 percent reported in July, indicating growth in employment for the fourth consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in August, six industries reported employment growth in the following order: Nonmetallic Mineral Products; Paper Products; Fabricated Metal Products; Machinery; Chemical Products; and Food, Beverage & Tobacco Products. The eight industries reporting a decrease in employment in August — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Plastics & Rubber Products; Computer & Electronic Products; Miscellaneous Manufacturing; and Transportation Equipment.

Employment %
Higher
%
Same
%
Lower
Net Index
Aug 2015 18 65 17 +1 51.2
Jul 2015 19 69 12 +7 52.7
Jun 2015 25 62 13 +12 55.5
May 2015 20 68 12 +8 51.7
Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in August as the Supplier Deliveries Index registered 50.7 percent, which is 1.8 percentage points higher than the 48.9 percent reported in July. This month of slowing supplier deliveries follows two consecutive months of faster supplier deliveries. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The five industries reporting slower supplier deliveries in August are: Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Machinery; and Transportation Equipment. The five industries reporting faster supplier deliveries during August are: Petroleum & Coal Products; Plastics & Rubber Products; Paper Products; Computer & Electronic Products; and Chemical Products. Eight industries reported no change in supplier deliveries in August compared to July.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
Aug 2015 7 87 6 +1 50.7
Jul 2015 7 86 7 0 48.9
Jun 2015 6 85 9 -3 48.8
May 2015 11 80 9 +2 50.7
Inventories*

The Inventories Index registered 48.5 percent in August, which is 1 percentage point lower than the 49.5 percent registered in July, indicating raw materials inventories are contracting in August for the second consecutive month. An Inventories Index greater than 42.9 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The six industries reporting higher inventories in August — listed in order — are: Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Machinery; Fabricated Metal Products; and Computer & Electronic Products. The seven industries reporting lower inventories in August — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Paper Products; Miscellaneous Manufacturing; and Chemical Products.

Inventories %
Higher
%
Same
%
Lower
Net Index
Aug 2015 18 61 21 -3 48.5
Jul 2015 19 61 20 -1 49.5
Jun 2015 21 64 15 +6 53.0
May 2015 17 69 14 +3 51.5
Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 53 percent in August, an increase of 9 percentage points from July when customers’ inventories registered 44 percent. August’s reading indicates that customers’ inventories are considered to be too high, which has not been the case since March 2009 when the Customers’ Inventory Index registered 54 percent.

The eight manufacturing industries reporting customers’ inventories as being too high during the month of August — listed in order — are: Fabricated Metal Products; Furniture & Related Products; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Transportation Equipment; and Miscellaneous Manufacturing. The three industries reporting customers’ inventories as too low during August are: Paper Products; Chemical Products; and Nonmetallic Mineral Products.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
Aug 2015 61 18 70 12 +6 53.0
Jul 2015 63 10 68 22 -12 44.0
Jun 2015 62 13 71 16 -3 48.5
May 2015 63 13 65 22 -9 45.5
Prices*

The ISM® Prices Index registered 39 percent in August, which is 5 percentage points lower than in July, indicating a decrease in raw materials prices for the 10th consecutive month. In August, 6 percent of respondents reported paying higher prices, 28 percent reported paying lower prices, and 66 percent of supply executives reported paying the same prices as in July. A Prices Index above 52.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, no industries are reporting paying increased prices for their raw materials in August. The 14 industries reporting paying lower prices during the month of August — listed in order — are: Primary Metals; Petroleum & Coal Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Nonmetallic Mineral Products; Chemical Products; Computer & Electronic Products; Machinery; Paper Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

Prices %
Higher
%
Same
%
Lower
Net Index
Aug 2015 6 66 28 -22 39.0
Jul 2015 9 70 21 -12 44.0
Jun 2015 14 71 15 -1 49.5
May 2015 15 69 16 -1 49.5
Backlog of Orders*

ISM®’s Backlog of Orders Index registered 46.5 percent in August, an increase of 4 percentage points as compared to the July reading of 42.5 percent, indicating contraction in order backlogs for the third consecutive month, but at a slower rate than in July. Of the 86 percent of respondents who measure their backlog of orders, 17 percent reported greater backlogs, 24 percent reported smaller backlogs, and 59 percent reported no change from July.

The five industries reporting increased order backlogs in August are: Textile Mills; Paper Products; Miscellaneous Manufacturing; Computer & Electronic Products; and Chemical Products. The nine industries reporting a decrease in order backlogs during August — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Primary Metals; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Machinery; Food, Beverage & Tobacco Products; and Nonmetallic Mineral Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
Aug 2015 86 17 59 24 -7 46.5
Jul 2015 87 13 59 28 -15 42.5
Jun 2015 89 21 52 27 -6 47.0
May 2015 88 26 55 19 +7 53.5
New Export Orders*

ISM®’s New Export Orders Index registered 46.5 percent in August, a reduction of 1.5 percentage points relative to the 48 percent reported in July, indicating the third consecutive month of decreases in new export orders.

The five industries reporting growth in new export orders in August are: Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Paper Products. The seven industries reporting a decrease in new export orders during August — listed in order — are: Primary Metals; Furniture & Related Products; Apparel, Leather & Allied Products; Chemical Products; Machinery; Fabricated Metal Products; and Transportation Equipment. Six industries reported no change in new export orders in August compared to July.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
Aug 2015 74 10 73 17 -7 46.5
Jul 2015 77 11 74 15 -4 48.0
Jun 2015 75 13 73 14 -1 49.5
May 2015 78 11 78 11 0 50.0
Imports*

ISM®’s Imports Index registered 51.5 percent in August, which is 0.5 percentage point lower than the 52 percent reported in July. This month’s reading represents 31 consecutive months of growth in imports.

The seven industries reporting growth in imports during the month of August — listed in order — are: Primary Metals; Transportation Equipment; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products. The four industries reporting a decrease in imports during August are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Machinery. Six industries reported no change in imports in August compared to July.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
Aug 2015 79 13 77 10 +3 51.5
Jul 2015 78 15 74 11 +4 52.0
Jun 2015 79 15 77 8 +7 53.5
May 2015 79 16 78 6 +10 55.0

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures increased by 4 days to 130 days. Average lead time for Production Materials increased by 2 days in August to 62 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased by 3 days to 28 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Aug 2015 23 9 10 18 22 18 130
Jul 2015 23 8 11 19 23 16 126
Jun 2015 24 7 9 16 26 18 135
May 2015 26 5 10 20 19 20 133
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Aug 2015 14 42 22 11 8 3 62
Jul 2015 16 38 20 16 8 2 60
Jun 2015 12 39 21 15 10 3 67
May 2015 15 35 24 13 10 3 66
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Aug 2015 42 37 16 4 1 0 28
Jul 2015 45 39 11 5 0 0 25
Jun 2015 47 36 11 5 1 0 26
May 2015 44 36 13 5 1 1 31
About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® in excess of 43.1 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.1 percent, it is generally declining. The distance from 50 percent or 43.1 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

About Institute for Supply Management®

Founded in 1915 as the first supply management institute in the world, Institute for Supply Management® (ISM®) is committed to advancing the practice of supply chain management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. This year, ISM celebrates 100 years of leading, innovating and guiding the profession through the renowned ISM Report On Business®, highly regarded certification programs, and industry-standard training and educational resources. ISM is a not-for-profit organization with global influence, serving supply chain professionals in more than 90 countries. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

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The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®‘s website at www.instituteforsupplymanagement.org on the first business day* of every month after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the September 2015 data will be released at 10:00 a.m. (ET) on Thursday, October 1, 2015.

*Unless the NYSE is closed.

ISM PMI Jan 2015 Report On Business

FOR RELEASE: February 2, 2015

 

Contact:   Kathleen Lacy
Report On Business® Analyst
ISM®, ROB/Research
Tempe, Arizona
800/888-6276, Ext. 3143
E-mail: klacy@ism.ws

January 2015 Manufacturing ISM® Report On Business®

PMI® at 53.5%


DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of January 2015.

This report reflects the recently completed annual adjustments to the seasonal adjustment factors used to calculate the indexes.

 

New Orders, Employment and Production Growing
Inventories Growing
Supplier Deliveries Slowing

 

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in January for the 20th consecutive month, and the overall economy grew for the 68th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The January PMI® registered 53.5 percent, a decrease of 1.6 percentage points from December’s seasonally adjusted reading of 55.1 percent. The New Orders Index registered 52.9 percent, a decrease of 4.9 percentage points from the seasonally adjusted reading of 57.8 percent in December. The Production Index registered 56.5 percent, 1.2 percentage points below the seasonally adjusted December reading of 57.7 percent. The Employment Index registered 54.1 percent, a decrease of 1.9 percentage points below the seasonally adjusted December reading of 56 percent. Inventories of raw materials registered 51 percent, an increase of 5.5 percentage points above the December reading of 45.5 percent. The Prices Index registered 35 percent, down 3.5 percentage points from the December reading of 38.5 percent, indicating lower raw materials prices in January relative to December. Comments from the panel indicate that most industries, but not all, are experiencing strong demand as 2015 kicks off. The West Coast dock slowdown continues to be a problem, negatively impacting both exports and imports as well as inventories.”

Of the 18 manufacturing industries, 14 are reporting growth in January in the following order: Primary Metals; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; Chemical Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Furniture & Related Products. The two industries reporting contraction in January are: Textile Mills; and Nonmetallic Mineral Products.

 

WHAT RESPONDENTS ARE SAYING …
  • “Strong customer demand for our products continues to grow.” (Food, Beverage & Tobacco Products)
  • “Customers are presenting many new opportunities.” (Fabricated Metal Products)
  • “Consumer demand remains strong for automotive. Seeking alternatives to maximize production with existing production capacity.” (Transportation Equipment)
  • “Chinese New Year, West Coast port dock slowdowns, coupled with railroad embargo are all creating logistical challenges and increased backlog of orders.” (Wood Products)
  • “Sales have stayed very strong even with the dip in oil prices.” (Computer & Electronic Products)
  • “Dock problems in California continue to delay shipment out of the West Coast. Most material prices are the same except resin prices are down.” (Chemical Products)
  • “Business conditions are good, stable to improving.” (Miscellaneous Manufacturing)
  • “West Coast port slowdown is getting serious. Mill has 40+ days of production at the ports and various warehouses.” (Paper Products)
  • “Agriculture equipment production remains weaker than previous year as farm commodity prices remain low.” (Machinery)
  • “Business in 2015 has started off on a fast pace. Very busy.” (Primary Metals)
MANUFACTURING AT A GLANCE
JANUARY 2015

Index

Series
Index
Jan
Series
Index
Dec
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI® 53.5 55.1 -1.6 Growing Slower 20
New Orders 52.9 57.8 -4.9 Growing Slower 20
Production 56.5 57.7 -1.2 Growing Slower 11
Employment 54.1 56.0 -1.9 Growing Slower 19
Supplier Deliveries 52.9 58.6 -5.7 Slowing Slower 20
Inventories 51.0 45.5 +5.5 Growing From Contracting 1
Customers’ Inventories 42.5 44.5 -2.0 Too Low Faster 2
Prices 35.0 38.5 -3.5 Decreasing Faster 3
Backlog of Orders 46.0 52.5 -6.5 Contracting From Growing 1
Exports 49.5 52.0 -2.5 Contracting From Growing 1
Imports 55.5 55.0 +0.5 Growing Faster 24
OVERALL ECONOMY Growing Slower 68
Manufacturing Sector Growing Slower 20

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

 

Commodities Up in Price

Corn Based Products; and Electric Components (2).

 

Commodities Down in Price

Aluminum (2); Brass (2); Butter; Carbon Steel; Copper (6); Copper Based Products; Diesel* (4); Ethylene; Fuel Oil*; Gasoline* (4); HDPE Resin (2); Natural Gas*; Nickel; Oil* (2); Oil Based Products* (3); PET Resin (3); Plastic Resin (2); Polypropylene Resin (2); Scrap Steel (2); Stainless Steel (3); Steel (2); Steel — Cold Rolled; and Steel — Hot Rolled (3).

 

Commodities in Short Supply

No commodities were reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.

*For additional information on the developing impact of declining oil prices, see the Addendum below.


JANUARY 2015 MANUFACTURING INDEX SUMMARIES


PMI®

Manufacturing expanded in January as the PMI® registered 53.5 percent, a decrease of 1.6 percentage points when compared to December’s reading of 55.1 percent, indicating growth in manufacturing for the 20th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January PMI® indicates growth for the 68th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 20th consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the PMI® for January (53.5 percent) corresponds to a 3.3 percent increase in real gross domestic product (GDP) on an annualized basis.”

 

THE LAST 12 MONTHS
Month PMI® Month PMI®
Jan 2015  53.5 Jul 2014  56.4
Dec 2014  55.1 Jun 2014  55.7
Nov 2014  57.6 May 2014  55.6
Oct 2014  57.9 Apr 2014  55.3
Sep 2014  56.1 Mar 2014  54.4
Aug 2014  58.1 Feb 2014  54.3
Average for 12 months – 55.8
High – 58.1
Low – 53.5
New Orders

ISM®’s New Orders Index registered 52.9 percent in January, a decrease of 4.9 percentage points when compared to the December seasonally adjusted reading of 57.8 percent, indicating growth in new orders for the 20th consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 10 industries reporting growth in new orders in January — listed in order — are: Printing & Related Support Activities; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Paper Products; Primary Metals; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. The four industries reporting a decrease in new orders during January are: Textile Mills; Furniture & Related Products; Petroleum & Coal Products; and Nonmetallic Mineral Products.

New
Orders
%
Better
%
Same
%
Worse
Net Index
Jan 2015 24 59 17 +7 52.9
Dec 2014 25 57 18 +7 57.8
Nov 2014 38 47 15 +23 62.1
Oct 2014 34 52 14 +20 63.0
Production

ISM®’s Production Index registered 56.5 percent in January, which is a decrease of 1.2 percentage points when compared to the seasonally adjusted 57.7 percent reported in December, indicating growth in production for the 11th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The eight industries reporting growth in production during the month of January — listed in order — are: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The three industries reporting a decrease in production during January are: Textile Mills; Nonmetallic Mineral Products; and Food, Beverage & Tobacco Products. Seven industries reported no change in production in January compared to December.

Production %
Better
%
Same
%
Worse
Net Index
Jan 2015 24 61 15 +9 56.5
Dec 2014 24 59 17 +7 57.7
Nov 2014 34 55 11 +23 62.6
Oct 2014 34 53 13 +21 62.8
Employment

ISM®’s Employment Index registered 54.1 percent in January, which is a decrease of 1.9 percentage points when compared to the seasonally adjusted 56 percent reported in December. This is the 19th consecutive month of growth in employment. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in January, nine industries reported employment growth in the following order: Petroleum & Coal Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Primary Metals; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. The four industries reporting a decrease in employment in January are: Nonmetallic Mineral Products; Computer & Electronic Products; Transportation Equipment; and Machinery.

Employment %
Higher
%
Same
%
Lower
Net Index
Jan 2015 15 75 10 +5 54.1
Dec 2014 19 70 11 +8 56.0
Nov 2014 21 63 16 +5 54.6
Oct 2014 19 69 12 +7 55.2
Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations slowed in January at a slower rate as the Supplier Deliveries Index registered 52.9 percent. This month’s reading is 5.7 percentage points lower than the seasonally adjusted 58.6 percent reported in December. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 10 industries reporting slower supplier deliveries in January — listed in order — are: Primary Metals; Plastics & Rubber Products; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Machinery; and Chemical Products. The two industries reporting faster supplier deliveries during January are: Printing & Related Support Activities; and Paper Products. Six industries reported no change in supplier deliveries in January compared to December.

Supplier
Deliveries
%
Slower
%
Same
%
Faster
Net Index
Jan 2015 14 80 6 +8 52.9
Dec 2014 17 80 3 +14 58.6
Nov 2014 14 80 6 +8 57.0
Oct 2014 15 79 6 +9 56.1
Inventories*

The Inventories Index registered 51 percent in January, which is 5.5 percentage points higher than the 45.5 percent registered in December, indicating raw materials inventories are growing following one month of inventories contracting. An Inventories Index greater than 42.9 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The six industries reporting higher inventories in January — listed in order — are: Wood Products; Fabricated Metal Products; Machinery; Furniture & Related Products; Chemical Products; and Primary Metals. The seven industries reporting lower inventories in January — listed in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Paper Products; and Food, Beverage & Tobacco Products.

Inventories %
Higher
%
Same
%
Lower
Net Index
Jan 2015 21 60 19 +2 51.0
Dec 2014 17 57 26 -9 45.5
Nov 2014 21 61 18 +3 51.5
Oct 2014 21 63 16 +5 52.5
Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 42.5 percent in January, a decrease of 2 percentage points from December when customers’ inventories registered 44.5 percent. January’s reading indicates that customers’ inventories are considered to be too low, and lower than December.

The two manufacturing industries reporting customers’ inventories as being too high during the month of January are: Nonmetallic Mineral Products; and Food, Beverage & Tobacco Products. The 10 industries reporting customers’ inventories as too low during January — listed in order — are: Textile Mills; Transportation Equipment; Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Computer & Electronic Products; and Miscellaneous Manufacturing.

Customers’
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low
Net Index
Jan 2015 62 9 67 24 -15 42.5
Dec 2014 62 10 69 21 -11 44.5
Nov 2014 61 13 74 13 0 50.0
Oct 2014 59 10 76 14 -4 48.0
Prices*

The ISM® Prices Index registered 35 percent in January, which is a decrease of 3.5 percentage points compared to the December reading of 38.5 percent. In January, 11 percent of respondents reported paying higher prices, 41 percent reported paying lower prices, and 48 percent of supply executives reported paying the same prices as in December. This is the third consecutive month that raw materials prices have registered a decrease, with the Prices Index decreasing a total of 18.5 percentage points over these three months. A Prices Index above 52.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the only industry reporting increased prices in January is Printing & Related Support Activities. The 15 industries reporting paying lower prices during the month of January — listed in order — are: Textile Mills; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Petroleum & Coal Products; Paper Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Furniture & Related Products; Machinery; Transportation Equipment; Primary Metals; and Miscellaneous Manufacturing.

Prices %
Higher
%
Same
%
Lower
Net Index
Jan 2015 11 48 41 -30 35.0
Dec 2014 12 53 35 -23 38.5
Nov 2014 14 61 25 -11 44.5
Oct 2014 21 65 14 +7 53.5
Backlog of Orders*

ISM®’s Backlog of Orders Index registered 46 percent in January, which is 6.5 percentage points lower than the 52.5 percent reported in December, indicating contraction in order backlogs following three months of growth in order backlogs. Of the 87 percent of respondents who reported their backlog of orders, 18 percent reported greater backlogs, 26 percent reported smaller backlogs, and 56 percent reported no change from December.

The three industries reporting increased order backlogs in January are: Wood Products; Primary Metals; and Fabricated Metal Products. The 11 industries reporting a decrease in order backlogs during January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Transportation Equipment; Computer & Electronic Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Paper Products; Machinery; and Nonmetallic Mineral Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less
Net Index
Jan 2015 87 18 56 26 -8 46.0
Dec 2014 87 25 55 20 +5 52.5
Nov 2014 87 27 56 17 +10 55.0
Oct 2014 88 24 58 18 +6 53.0
New Export Orders*

ISM®’s New Export Orders Index registered 49.5 percent in January, which is 2.5 percentage points lower than the 52 percent reported in December. January’s reading reflects a month of contraction in the level of exports, following 25 consecutive months of growth in new export orders.

The five industries reporting growth in new export orders in January are: Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Transportation Equipment. The six industries reporting a decrease in new export orders during January — listed in order — are: Textile Mills; Paper Products; Primary Metals; Machinery; Chemical Products; and Furniture and Related Products. Seven industries reported no change in new export orders in January compared to December.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower
Net Index
Jan 2015 77 10 79 11 -1 49.5
Dec 2014 76 14 76 10 +4 52.0
Nov 2014 75 15 80 5 +10 55.0
Oct 2014 76 14 75 11 +3 51.5
Imports*

ISM®’s Imports Index registered 55.5 percent in January, which is 0.5 percentage point higher than the 55 percent reported in December. This month’s reading represents 24 consecutive months of growth in imports.

The eight industries reporting growth in imports during the month of January — listed in order — are: Printing & Related Support Activities; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products; and Furniture & Related Products. The four industries reporting a decrease in imports during January are: Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; and Primary Metals.

Imports %
Reporting
%
Higher
%
Same
%
Lower
Net Index
Jan 2015 76 16 79 5 +11 55.5
Dec 2014 78 18 74 8 +10 55.0
Nov 2014 78 16 80 4 +12 56.0
Oct 2014 77 16 77 7 +9 54.5

 

* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures decreased 1 day to 125 days. Average lead time for Production Materials decreased 4 days to 59 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies remained unchanged at 27 days.

Percent Reporting
Capital
Expenditures
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Jan 2015 28 6 11 16 22 17 125
Dec 2014 26 6 11 17 24 16 126
Nov 2014 28 7 8 19 22 16 123
Oct 2014 29 6 11 18 21 15 118
Production
Materials
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Jan 2015 17 36 22 16 7 2 59
Dec 2014 13 41 22 13 8 3 63
Nov 2014 18 36 23 14 7 2 58
Oct 2014 16 34 24 19 4 3 61
MRO
Supplies
Hand-
to-
Mouth
30
Days
60
Days
90
Days
6
Months
1
Year+
Average
Days
Jan 2015 45 37 11 6 1 0 27
Dec 2014 47 33 14 5 1 0 27
Nov 2014 45 39 10 4 2 0 27
Oct 2014 45 39 9 6 1 0 27

Addendum
Business Survey Committee Panelists Comment on Declining Oil Prices

Because much of manufacturing is an energy intensive activity, we were curious as to what, if anything, respondents had to say about falling oil/energy prices. Every month, members of the Business Survey Committees are asked to comment about relevant issues facing their worksite. In this addendum, we examine comments regarding oil/energy made by respondents in October, November, and December, 2014, and January 2015.

In October, a typical number of comments were received. Of these, only 2.3 percent had anything to say about oil or energy. Less than 0.6 percent of comments were about oil and energy, were positive, and spoke of possible additional demand for their offerings due to more disposable income and the continued strength of their manufacturing sub-sector. The 1.7 percent of comments that were negative conveyed concern about shortages of feed stocks, lack of correlation between the price of plastics and crude, price volatility itself disrupting markets (mentioned by an oil/gas producer), and falling oil prices dampening demand for alternative energy technologies.

In November, the total number of comments dropped somewhat (about five percent). Of these comments, only 2.1 percent mentioned oil or energy. A small handful only noted that oil prices had declined while the other 1.8 percent were more substantive. Overall, 1.2 percent were positive about the oil price decline and mentioned lower prices helping their bottom line, generally stimulating the economy, and bringing down the prices of plastics. On the negative side, oil/gas producers warned that depressed prices are forcing changes to their capital expenditures plans and chemical manufacturers mentioned that the current price environment (November) was accelerating the decline in prices for their products.

December was a different story. Although the total number of comments was 18 percent below that of October, the proportion of oil/gas related comments increased to 6.7 percent overall. A small handful simply noted that oil prices are declining, 3.1 percent were mostly positive, and 2.8 percent spoke to the negative impacts of the decline in prices. In summary, the positive comments mentioned additional demand for oil/gas due to the price decline, additional disposable income for consumers and businesses, and some oil-based products producers’ struggle to maintain their prices. On the downside, there were mentions of buyers demanding reductions or holding orders in anticipation of still lower prices, producers’ need to reevaluate capital expenditures projects, and regional economies being strained by what might be a new normal. Sentiments expressed in December pointed to the double-edged sword that is falling oil/gas prices. While in October and November, only general comments were made, in December, comments were made in the production, new orders, and exports areas of the survey as well.

January saw a rebound of the total count of comments to near normal levels. However, the proportion of oil/gas related comments held almost steady at 6.1 percent overall. A small handful again simply noted that oil prices are declining, while 3.2 percent were mostly positive, and 2.5 percent spoke to the negative effects of this trend. Most of the positive comments have to do with the declining costs for petroleum-based products (plastics, in particular) and other energy related inputs. However, a few respondents are lamenting the fact that they are still waiting for their price reductions. On the downside, the negative comments are becoming a bit darker. There are comments about impacts on growth and investment plans and earnings forecasts and the injection of the unknown into their operating environment. Respondents mention buyers demanding reductions or holding orders in anticipation of still lower prices. An apparent tightening of cash is prompting a few businesses to request rate reductions from their suppliers. Sentiments expressed in January again illustrated that falling oil/gas prices cut both ways. This month, almost all comments were submitted as general comments. The few exceptions were submitted as inventory related comments.

The pros and cons of the downturn in pricing for oil and gas are becoming more evident. The good news is that there are few surprises (either good or bad) regarding how this change in price is playing out through the economy. However, if current trends continue, we may begin to see new, experimental strategies and tactics as to how to survive and grow in a lower price environment as beleaguered oil and gas related firms struggle to move forward.

Return to Summary

About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

 

Data and Method of Presentation

The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® in excess of 43.1 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.1 percent, it is generally declining. The distance from 50 percent or 43.1 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

The Manufacturing ISM® Report On Business® is published monthly by Institute for Supply Management®, the first supply institute in the world. Founded in 1915, ISM®‘s mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. By executing and extending its mission through education, research, standards of excellence and information dissemination — including the renowned monthly ISM® Report On Business® — ISM® maintains a strong global influence among individuals and organizations. ISM® is a not-for-profit educational association that serves professionals with an interest in supply management who live and work in more than 80 countries. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®‘s website at www.ism.ws on the first business day of every month after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the February 2015 data will be released at 10:00 a.m. (ET) on Monday, March 2, 2015.