Press Release: PMI(R) at 58.2%; November Manufacturing ISM(R) Report On Business(R)

12/01/17 10:15 AM EST

PMI(R) at 58.2%; November Manufacturing ISM(R) Report On Business(R)

PR Newswire

TEMPE, Ariz., Dec. 1, 2017

New Orders, Production, and Employment Continue Growing; Supplier Deliveries Slowing at Slower Rate, Backlog Growing; Raw Materials Inventories Contracting, Customers' Inventories Improving; Prices Increasing at Slower Rate

TEMPE, Ariz., Dec. 1, 2017 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 102nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM(R) Report On Business(R) .

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management(R) (ISM(R) ) Manufacturing Business Survey Committee: "The November PMI(R) registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. The New Orders Index registered 64 percent, an increase of 0.6 percentage point from the October reading of 63.4 percent. The Production Index registered 63.9 percent, a 2.9 percentage point increase compared to the October reading of 61 percent. The Employment Index registered 59.7 percent, a decrease of 0.1 percentage point from the October reading of 59.8 percent. The Supplier Deliveries Index registered 56.5 percent, a 4.9 percentage point decrease from the October reading of 61.4 percent. The Inventories Index registered 47 percent, a decrease of 1 percentage point from the October reading of 48 percent. The Prices Index registered 65.5 percent in November, a 3 percentage point decrease from the October level of 68.5, indicating higher raw materials prices for the 21st consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production leading gains, employment expanding at a slower rate, order backlogs stable and expanding, and export orders all continuing to grow in November. Supplier deliveries continued to slow (improving), but at slower rates, and inventories continued to contract during the period. Price increases continued, but at a slower rate. The Customers' Inventories Index improved but remains at low levels."

Of the 18 manufacturing industries, 14 reported growth in November, in the following order: Paper Products; Machinery; Transportation Equipment; Computer & Electronic Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; and Primary Metals. Two industries reported contraction during the period: Wood Products; and Petroleum & Coal Products.

WHAT RESPONDENTS ARE SAYING ...

   -- "Continuing to see more orders for the next six to 12 months." (Chemical 
      Products) 
 
   -- "Strong sales through third and now fourth quarters. Backlog increasing, 
      and capacity at suppliers tightening." (Machinery) 
 
   -- "Business has leveled out but remains strong heading into the end of the 
      year." (Computer & Electronic Products) 
 
   -- "We are just coming off a record sales year. We expect to continue in 
      2018 robust activity." (Miscellaneous Manufacturing) 
 
   -- "We are seeing steady, consistent demand for end of year. We usually see 
      a slowdown, which we haven't seen yet." (Fabricated Metal Products) 
 
   -- "Overall industry demand remains strong. Continue to have a healthy 
      backlog of orders. Local economy is also strong, with a fairly tight 
      labor market." (Transportation Equipment) 
 
   -- "Business is strong. Employment is tight. Supplier deliveries have 
      lengthened. A few suppliers are still blaming Hurricane Harvey for the 
      lead times." (Food, Beverage & Tobacco Products) 
 
   -- "Strong season demand for products and continued requirements for 
      uptime." (Nonmetallic Mineral Products) 
 
   -- "Currently, we have not experienced the typical seasonal slowdown toward 
      the end of Q4. Could be that there is a lot of optimism in the American 
      economy." (Plastics & Rubber Products) 
 
MANUFACTURING AT A GLANCE 
 November 2017 
              Series   Series   Percentage               Rate 
              Index    Index     Point                   of      Trend* 
Index         Nov      Oct       Change     Direction    Change  (Months) 
PMI(R)        58.2     58.7     -0.5        Growing      Slower  15 
New Orders    64.0     63.4     +0.6        Growing      Faster  15 
Production    63.9     61.0     +2.9        Growing      Faster  15 
Employment    59.7     59.8     -0.1        Growing      Slower  14 
Supplier 
 Deliveries   56.5     61.4     -4.9        Slowing      Slower  19 
Inventories   47.0     48.0     -1.0        Contracting  Faster  2 
Customers' 
 Inventories  45.5     43.5     +2.0        Too Low      Slower  5 
Prices        65.5     68.5     -3.0        Increasing   Slower  21 
Backlog of 
 Orders       55.0     55.0     0.0         Growing      Same    10 
New Export 
 Orders       56.0     56.5     -0.5        Growing      Slower  21 
Imports       54.5     54.0     +0.5        Growing      Faster  10 
OVERALL ECONOMY 
 Manufacturing Sector                       Growing      Slower  102 
                                            Growing      Slower  15 
 

Manufacturing ISM(R) Report On Business(R) 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 (13); Caustic Soda (5); Copper; Corrugate (14); Nickel Based Metals; Pallets; Plastic Resins (4); Polycarbonate; Polyethylene (3); Polypropylene (3); Resin Based Products; Silicone; Soybean Oil; Steel -- Hot Rolled (12); Steel Tubing; Titanium Dioxide (2); and Zinc Oxide.

Commodities Down in Price

None.

Commodities in Short Supply

Capacitors (5); Resistors; and Titanium Dioxide.

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

NOVEMBER 2017 MANUFACTURING INDEX SUMMARIES

PMI(R) Manufacturing expanded in November as the PMI(R) registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. "This indicates growth in manufacturing for the 15th consecutive month led by expansion in New Orders and Production, offset by Supplier Delivery improvement and declines in raw material Inventory, " 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(R) above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI(R) indicates growth for the 102nd consecutive month in the overall economy and the 15th straight month of growth in the manufacturing sector. Fiore says, "The past relationship between the PMI(R) and the overall economy indicates that the average PMI(R) for January through November (57.4 percent) corresponds to a 4.5 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI(R) for November (58.2 percent) is annualized, it corresponds to a 4.7 percent increase in real GDP annually."

THE LAST 12 MONTHS

 
Month       PMI(R)   Month     PMI(R) 
Nov 2017    58.2     May 2017  54.9 
Oct 2017    58.7     Apr 2017  54.8 
Sep 2017    60.8     Mar 2017  57.2 
Aug 2017    58.8     Feb 2017  57.7 
Jul 2017    56.3     Jan 2017  56.0 
Jun 2017    57.8     Dec 2016  54.5 
Average for 2017 -- 57.4 
 Average for 12 months -- 57.1 
 High -- 60.8 
 Low -- 54.5 
 

New Orders

ISM(R) 's New Orders Index registered 64 percent in November, which is an increase of 0.6 percentage point when compared to the 63.4 percent reported for October, indicating growth in new orders for the 15th consecutive month. "New Order expansion continues at a strong pace with the index at six straight months of levels above 60 percent," says Fiore. A New Orders Index above 52.3 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Fourteen of 18 industries reported growth in new orders in November, listed in the following order: Electrical Equipment, Appliances & Components; Paper Products; Furniture & Related Products; Plastics & Rubber Products; Machinery; Primary Metals; Printing & Related Support Activities; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Chemical Products; Miscellaneous Manufacturing; and Fabricated Metal Products. Two industries -- Wood Products; and Textile Mills -- reported a decrease in new orders in November compared to October.

 
New Orders   %Better  %Same  %Worse  Net  Index 
Nov 2017     31       60     9       +22  64.0 
Oct 2017     35       52     13      +22  63.4 
Sep 2017     35       56     9       +26  64.6 
Aug 2017     33       52     15      +18  60.3 
 

Production

ISM(R) 's Production Index registered 63.9 percent in November, which is an increase of 2.9 percentage points when compared to the 61 percent reported for October, indicating growth in production for the 15th consecutive month. This is the highest reading since March 2011, when the index registered 64.2 percent. "Production expansion continues at levels that kept pace with new orders, consumed raw material inventory and positively impacted customer inventory," says Fiore. An index above 51.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

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December 01, 2017 10:15 ET (15:15 GMT)

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