Press Release: PMI(R) at 59.7%; December Manufacturing ISM(R) Report On Business(R)
PMI(R) at 59.7%; December Manufacturing ISM(R) Report On Business(R)
TEMPE, Ariz., Jan. 3, 2018
New Orders, Production, and Employment Continue Growing; Supplier Deliveries Slowing at Faster Rate; Backlog Growing; Raw Materials Inventories Contracting, Customers' Inventories Too Low; Prices Increasing at Faster Rate
TEMPE, Ariz., Jan. 3, 2018 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 103rd 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 December PMI(R) registered 59.7 percent, an increase of 1.5 percentage points from the November reading of 58.2 percent. The New Orders Index registered 69.4 percent, an increase of 5.4 percentage points from the November reading of 64 percent. The Production Index registered 65.8 percent, a 1.9 percentage point increase compared to the November reading of 63.9 percent. The Employment Index registered 57 percent, a decrease of 2.7 percentage points from the November reading of 59.7 percent. The Supplier Deliveries Index registered 57.9 percent, a 1.4 percentage point increase from the November reading of 56.5 percent. The Inventories Index registered 48.5 percent, an increase of 1.5 percentage points from the November reading of 47 percent. The Prices Index registered 69 percent in December, a 3.5 percentage point increase from the November reading of 65.5 percent, indicating higher raw materials prices for the 22nd 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 expanding at a faster rate; and export orders and imports continuing to grow in December. 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 reported contraction during the period: Wood Products; and Textile Mills.
WHAT RESPONDENTS ARE SAYING ...
-- "Our business is moving higher into the new year. Increased sales are resulting in increased purchases of CapEx and raw materials." (Chemical Products) -- "Strong international sales -- Europe and Australia -- versus last two years. U.S. sales continue to grow. Seeing commodity pricing pressures." (Machinery) -- "We are seeing a ramp-up with companies releasing early 2018 spend now." (Computer & Electronic Products) -- "Business conditions are good; we are tracking well to our projections for the year." (Miscellaneous Manufacturing) -- "First quarter 2018 probably will be better than the fourth quarter 2017." (Fabricated Metal Products) -- "Domestic and international sales on the rise." (Transportation Equipment) -- "Economy [is] strong and business is strong, yet signals of headwinds in 2018 are persistent." (Food, Beverage & Tobacco Products) -- "All suppliers are reporting strong business activity and difficulties obtaining qualified employees." (Paper Products) -- "Demand at this time is strong in the construction part of our business. I think it is due to the impact of the hurricanes and the rebuild and new construction that is required." (Plastics & Rubber Products) MANUFACTURING AT A GLANCE December 2017 Series Series Percentage Index Index Point Rate of Trend* Index Dec Nov Change Direction Change (Months) PMI(R) 59.7 58.2 +1.5 Growing Faster 16 New Orders 69.4 64.0 +5.4 Growing Faster 16 Production 65.8 63.9 +1.9 Growing Faster 16 Employment 57.0 59.7 -2.7 Growing Slower 15 Supplier Deliveries 57.9 56.5 +1.4 Slowing Faster 20 Inventories 48.5 47.0 +1.5 Contracting Slower 3 Customers' Inventories 42.0 45.5 -3.5 Too Low Faster 6 Prices 69.0 65.5 +3.5 Increasing Faster 22 Backlog of Orders 56.0 55.0 +1.0 Growing Faster 11 New Export Orders 58.5 56.0 +2.5 Growing Faster 22 Imports 57.5 54.5 +3.0 Growing Faster 11 OVERALL ECONOMY Manufacturing Sector Growing Faster 103 Growing Faster 16
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* (14); Caustic Soda (6); Copper (2); Corrugate (15); Electrical Components; Memory; Polypropylene (4); Rubber; Steel; Steel -- Scrap; Steel -- Hot Rolled (13); Stainless Steel; and Titanium Dioxide (3).
Commodities Down in Price
Commodities in Short Supply
Capacitors (6); Electrical Components; Resistors (2); and Titanium Dioxide (2).
Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.
DECEMBER 2017 MANUFACTURING INDEX SUMMARIES
PMI(R) Manufacturing expanded in December as the PMI(R) registered 59.7 percent, an increase of 1.5 percentage points from the November reading of 58.2 percent. "This indicates growth in manufacturing for the 16th consecutive month, led by strong expansion in new orders and production with hiring growing at a slower rate and supplier deliveries continuing to struggle," 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 December PMI(R) indicates growth for the 103rd consecutive month in the overall economy and the 16th 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 December (57.6 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 December (59.7 percent) is annualized, it corresponds to a 5.2 percent increase in real GDP annually."
THE LAST 12 MONTHS
Month PMI(R) Month PMI(R) Dec 2017 59.7 Jun 2017 57.8 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 Average for 12 months -- 57.6 High -- 60.8 Low -- 54.8
ISM(R) 's New Orders Index registered 69.4 percent in December, which is an increase of 5.4 percentage points when compared to the 64 percent reported for November, indicating growth in new orders for the 16th consecutive month. This is the highest reading since January 2004, when the index registered 70.6 percent. "New Orders expansion continues at a strong pace, with the index at seven straight months of levels above 60 percent. This is its highest expansion level in 14 years," 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).
Fifteen of 18 industries reported growth in new orders in December, listed in the following order: Machinery; Apparel, Leather & Allied Products; Primary Metals; Computer & Electronic Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Petroleum & Coal Products. The only industry reporting a decrease in new orders in December compared to November is Wood Products.
New Orders %Better %Same %Worse Net Index Dec 2017 37 55 8 +29 69.4 Nov 2017 31 60 9 +22 64.0 Oct 2017 35 52 13 +22 63.4 Sep 2017 35 56 9 +26 64.6
ISM(R) 's Production Index registered 65.8 percent in December, which is an increase of 1.9 percentage points when compared to the 63.9 percent reported for November, indicating growth in production for the 16th consecutive month. This is the highest reading since May 2010, when the index registered 66.5 percent. "Production expansion continues at the strongest levels in seven years, but could not keep up with new order input and customer inventory needs, resulting in lower customer inventories and higher backlogs," 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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January 03, 2018 10:15 ET (15:15 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.