From Procurement to Profit

PMI at 59.7% as Manufacturing Gains Continue

Economic activity in the manufacturing sector and the overall economy both expanded in December, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The Purchasing Managers Index (PMI) was up for the 103rd consecutive month, at 59.7% for December, an increase of 1.5 percentage points from the November reading of 58.2%.

The New Orders Index registered 69.4%, an increase of 5.4 percentage points from the November reading of 64%.

The Production Index registered 65.8%, a 1.9 percentage point increase compared to the November reading of 63.9%.

The Employment Index registered 57%, a decrease of 2.7 percentage points from the November reading of 59.7%.

The Supplier Deliveries Index registered 57.9%, a 1.4 percentage point increase from the November reading of 56.5%.

The Inventories Index registered 48.5%, an increase of 1.5 percentage points from the November reading of 47%.

The Prices Index registered 69%in December, a 3.5 percentage point increase from the November reading of 65.5%, indicating higher raw materials prices for the 22nd consecutive month.

Comments from the panel of supply chain managers reflect expanding business conditions in December, with new orders and production leading the gains; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow.

Supplier deliveries continued to slow (improving) at a faster rate, and inventories continued to contract at a slower rate during the period.

Price increases continued at a faster rate.

The Customers’ Inventories Index declined and remains at low levels.

Of the 18 manufacturing industries, 16 reported growth in December, in the following order: Machinery; Computer & Electronic Products; Paper Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Primary Metals; Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Furniture & Related Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.

Two industries,  Wood Products; and Textile Mills, reported contraction during the period.

A PMI reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally declining.

A PMI above 43.3%, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is expanding; below 43.3%, it is declining.

The Manufacturing ISM Report On Business is based on data compiled from purchasing and supply executives nationwide.

The full text version of the report is posted on ISM’s website at www.ismrob.org

The Institute for Supply Management (ISM) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually.

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