Posted on 05/07/2012 12:47:10 PM PDT by robowombat
ISM Report: Pace Of Manufacturing Growth Is Quickening
Activity in the manufacturing sector and the overall economy has been growing for some time, and now it appears that the pace of growth is quickening.
Bradley J. Holcomb, CPSM, CPS
"It’s just a reflection of what I think is a stable economic environment, despite the global concerns about Europe and so on,” says Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Manufacturing is a reflection of that stability.” According to the April Manufacturing ISM Report On Business, economic activity in the manufacturing sector expanded in April for the 33rd consecutive month and the overall economy grew for the 35th straight month. Furthermore, the pace in which manufacturing grew was the fastest since June of 2011.
The PMI registered 54.8 percent in April, an increase of 1.4 percentage points when compared with March’s reading of 53.4 percent. A reading above 50 percent indicates the manufacturing economy is generally expanding, while a reading below 50 percent means it is generally contracting.
“The PMI being up 1.4, I love the underpinnings of that,” says Holcomb. “New orders, production, employment, all are up and are at about a one-year high.”
Indeed, those key indexes showed increases in the latest report. The New Orders Index came in at a 13-month high, the ISM Production Index registered a 14-month high, and the Employment Index came in at an 11-month high.
New Orders
The ISM New Orders Index, in particular, saw significant growth. It registered 58.2 percent in April, which is 3.7 percentage points higher than the March reading of 54.5 percent.
According to Holcomb, New Orders is a critical index to monitor when trying to gauge future economic activity.
“New orders are going to be my focus,” he says. “That really is the one index that drives this whole system.”
Production
The ISM Production Index registered 61 percent in April, marking an increase of 2.7 percentage points when compared with a reading of 58.3 percent in March. April marked the 35th consecutive month of growth in this area.
Employment
Furthermore, the ISM Employment Index is also trending upward. It registered 57.3 percent in April, 1.2 percentage points higher than the 56.1 percent reported in March.
“(Employment) is pulled along by new orders and production,” says Holcomb. “Employers are adding to their payrolls because of what they see in the new orders. They’re not hesitating.”
Referring to the index, Holcomb adds, ““It’s just a nice, gentle upward trend, which I think will continue for the foreseeable future.”
Prices
Prices of raw materials were on the rise earlier this year, but Holcomb says that had quite a bit to do with suppliers introducing their new pricing at the start of the year. Now the index is more stable. The ISM Prices Index registered 61.0 percent in April, the same as in March and 0.5 less than in February.
“The prices index is pretty moderate and level from last month,” says Holcomb. “It’s much more moderate than at this time in 2011, so there is really no concern with price escalation.”
Overall Outlook
Overall, the April ISM Report On Business is one of the most positive ones that has been released in months. That being said, there isn’t much of a reason to think economic activity in the manufacturing sector shouldn’t continue to expand in the coming months.
“I’m pleasantly surprised with the overall strength, but at the same time I’ve said that this is a sustainable trend, and it continues to be that” says Holcomb.
In his role as the Chair of the Institute for Supply Management Manufacturing Business Survey Committee, Bradley J. Holcomb writes the monthly Manufacturing ISM Report on Business based on the survey results of approximately 350 professionals across 18 different industry sectors. The Report on Business is released on the first business day of each month, and features the PMI Index as its key measure. For more information on the Institute of Supply Management, visit www.ism.ws.
Only guns and ammo I would believe.
Only guns and ammo I would believe.
Probably correct. Here is some more of the same. Is this some sort of happy talk campaign or what:
http://www.manufacturing.net/news/2012/03/breaking-down-the-isms-recent-manufacturing-report
Breaking Down The ISM’s Recent Manufacturing Report
Thu, 03/08/2012 - 12:45pm Mike Schmidt, Associate Editor, Manufacturing Business Technology
Get today’s manufacturing headlines and news - Sign up now!
Steady and sustainable growth seems to be in store for the manufacturing sector and the economy as a whole over the course of the next few months.
At least that’s according to the latest Manufacturing ISM Report on Business. It states economic activity in the manufacturing sector expanded in February for the 31st consecutive month, and the overall economy grew for the 33rd consecutive month.
Furthermore, the PMI registered 52.4, a decrease of 1.7 percentage points when compared with January’s reading of 54.1. A reading above 50 percent indicates the manufacturing economy is generally expanding, while a reading below 50 percent means it is generally contracting.
“Some folks have looked at the PMI being down 1.7 and questioned that,” says Bradley J. Holcomb, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee. “But if you combine January and February together, we’re really off to a good, and I’ll say sustainable, start.”
Especially if one was to compare the early-2012 PMIs with those from a year ago.
“Last year in the first four months it was right at 60ish, and that was just too strong to start out,” continues Holcomb. “Then we kind of lost some steam in the back half of the year. This I think positions us very well for continued growth in these ranges.”
Bradley J. Holcomb, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee
Supplier Deliveries
While this most recent report didn’t see many significant or surprising percentage point changes to various indexes, ISM’s Supplier Deliveries Index saw a notable decrease from January. The delivery performance of suppliers to manufacturing organizations was faster in February, as the index registered 49 percent. This is a 4.6 percentage points lower than the 53.6 reported in January. The faster delivery comes after 31 consecutive months in which supplier deliveries slowed.
“That hasn’t happened since May of 2009, when the index was 48.9,” says Holcomb. “But I’m not at all concerned about it. It just shows that suppliers have sort of caught up with their inventory and their production as they feed manufacturing. It’ll be interesting to watch, but certainly nothing to be concerned about whatsoever.”
Prices
The ISM Prices Index has been on the rise for some time now. It registered 61.5 percent in February, 6 percentage points higher than the 55.5 percent reported in January. This marks the second consecutive month this index has reflected an increase in the price of raw materials since September of this past year.
“This is pretty normal and, quite frankly, nominal when suppliers introduce their new pricing to manufacturers at the start of the year,” says Holcomb. “When you look back a year ago, this index was up in the eighties, so this is pretty moderate by comparison.”
That being said, the Chair of the ISM Manufacturing Business Survey Committee does not expect a repeat of 2011.
“I think this is going to be fairly moderate for the year and certainly nothing I’m concerned about at this point,” Holcomb adds.
Exports
Another area of note is ISM’s New Export Orders Index, which registered 4.5 percentage points higher than the 55 percent reported in January. While the index has stayed at 50 percent or above for the past 32 straight months, Holcomb was a bit surprised to see it reach such heights.
“55 was already strong and the 12-month average was already 54.5,” says Holcomb. “So with all the news we hear about concerns in China and Europe, etc., we’re still showing very, very strong exports. So that was a good news surprise.”
Overall Outlook
According to Holcomb, there is some concern regarding financial issues in places such as Europe and China. However, he states that many of those who contributed opinions to the report feel like those issues will be resolved in due time.
“So I think this is a very sustainable point that we’re at and I look forward to much of the same over the next few months,” says Holcomb.
He also points to two indexes as key to the continued stable and solid growth he expects to see in the manufacturing sector and overall economy in the coming months: new orders and prices.
While prices have been on the rise a bit, the ISM New Orders Index showed slightly less growth this month. The index registered 54.9 percent in February, which is a decrease of 2.7 percentage points when compared to the January reading of 57.6 percent.
“New orders kind of drive the bus here,” says Holcomb. “I look for new orders to stay in this range and to be consistent and relatively smooth over the course of the next few months, and that will bode well for production and employment.”
In his role as the Chair of the Institute for Supply Management Manufacturing Business Survey Committee, Bradley J. Holcomb writes the monthly Manufacturing ISM Report on Business based on the survey results of approximately 350 professionals across 18 different industry sectors. The Report on Business is released on the first business day of each month, and features the PMI Index as its key measure. For more information on the Institute of Supply Management, visit www.ism.ws.
...and those backpacks full of MRE’s they advertise on Glenn Beck’s show
This administration cooks the books. My investments have flat-lined these past four years and that is tell-tale data that shows that the overall manufacturing economy has not grown. The losses balance out the gains so net growth is either marginal or near 0. Our low GDP numbers verify that even further.
However, after three years of contraction it would seem that some replacement driven activity would be happening and that this might be concentrated in the capital goods part of the economy so that a modest upward trend in some manufacturing lines is plausible. Doe not translate to any new jobs as most of this will be handled by overtime and limited recall of some furloughed workers.
so the patheticly tiny increase in the RATE of which the mediocre production improvement grew from a dismally small value is a sign the Obamanomics is WORKING!
YAY US!
And....many FReepers have tried to convince me that Obama has no idea what he’s doing.
Yes. There comes a point after any recession that investors eventually begin to look beyond commodities and equities and start to fund manufacturing. Generally, though, the investment will be in existing short-term processes rather than in long-term expansion.
So, this is good news but probably won't lead to economic growth.
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