ISM index shows positive trend for manufacturing sector

The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for November, and the story told is another positive one with the PMI at 58.2% — down from October’s reading of 58.7% but still well above the reading of 50% that indicates the manufacturing economy is generally expanding. Below 50% indicates it is generally contracting.

A PMI above 50%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates growth for the 102nd consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 15th consecutive month.

According to Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, “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.”

The New Orders Index registered 64%, an increase of 0.6 percentage point from the October reading of 63.4%. The Production Index registered 63.9%, a 2.9 percentage point increase compared to the October reading of 61%. The Employment Index registered 59.7%, a decrease of 0.1 percentage point from the October reading of 59.8%.

The Supplier Deliveries Index registered 56.5%, a 4.9 percentage point decrease from the October reading of 61.4%. The Inventories Index registered 47%, a decrease of 1 percentage point from the October reading of 48%. The Prices Index registered 65.5% in November, a 3 percentage point decrease from the October level of 68.5%, indicating higher raw materials prices for the 21st consecutive month.

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.