Index indicates growth in U.S. manufacturing sector

The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for December, and the story told is another positive one with the PMI at 59.7% — up from November’s reading of 58.2% and 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 December PMI indicates growth for the 103rd consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 16th 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 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.”

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.

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.