Good manufacturing report

by The City Wire staff ([email protected]) 89 views 

The Manufacturing ISM Report on Business released Monday (Jan. 3) shows that economic activity in the manufacturing sector expanded in December for the 17th consecutive month, and the overall economy grew for the 20th consecutive month.

“The manufacturing sector continued its growth trend as indicated by this month’s report. We saw significant recovery for much of the U.S. manufacturing sector in 2010,” noted Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, in a statement.

Ore said the recovery was focused on autos, metals, food, machinery, computers and electronics, but “industries tied primarily to housing continue to struggle.”

Also, manufacturers that export have benefited from global demand and the weaker dollar, Ore noted. He said December’s “strong readings” in new orders and production “should create momentum as we go into the first quarter of 2011.”

KEY ISM FINDINGS
• Of the 18 manufacturing industries, 11 are reporting growth in December, in the following order: Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Textile Mills; Plastics & Rubber Products; Transportation Equipment; Electrical Equipment, Appliances & Components; and Chemical Products.

• The four industries reporting contraction in December are: Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; and Miscellaneous Manufacturing.

• Manufacturing continued to grow in December as the PMI registered 57%, an increase of 0.4 percentage point when compared to November’s reading of 56.6%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

• The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (57.3%) corresponds to a 5.1% increase in real gross domestic product (GDP). In addition, if the PMI for December (57%) is annualized, it corresponds to a 5% increase in real GDP annually.

• ISM’s New Orders Index registered 60.9% in December, up compared to the 56.6% reported in November. This is the 18th consecutive month of growth in the New Orders Index. A New Orders Index above 50.2%, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

• ISM’s Employment Index registered 55.7% in December, down compared to the 57.5% reported in November. This is the 13th consecutive month of growth in manufacturing employment. An Employment Index above 49.8%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. Of the 18 manufacturing industries, nine reported growth in employment in December.