ISM: New Orders, Employment and Production Growing

According to the latest Manufacturing ISM Report on Business, economic activity in the manufacturing sector expanded in December for the 19th consecutive month, and the overall economy grew for the 67th consecutive month.

The report was issued by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. “The December PMI registered 55.5%, a decrease of 3.2 percentage points from November’s reading of 58.7%.”

The New Orders Index registered 57.3%, a decrease of 8.7 percentage points from the reading of 66% in November. The Production Index registered 58.8%, 5.6 percentage points below the November reading of 64.4%. The Employment Index registered 56.8%, an increase of 1.9 percentage points above the November reading of 54.9%. Inventories of raw materials registered 45.5%, a decrease of 6 percentage points from the November reading of 51.5%. The Prices Index registered 38.5%, down 6 percentage points from the November reading of 44.5%, indicating lower raw materials prices in December relative to November.

Comments from the panel are mixed, with some indicating that falling oil prices have an upside while others indicate a downside. Other comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown.

Of the 18 manufacturing industries, 11 are reporting growth in December in the following order: Printing & Related Support Activities; Fabricated Metal Products; Primary Metals; Furniture & Related Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Textile Mills; Paper Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Transportation Equipment. The six industries reporting contraction in December — listed in order — are: Plastics & Rubber Products; Wood Products; Machinery; Nonmetallic Mineral Products; Chemical Products; and Computer & Electronic Products.

What respondents said:

  • “Retail sales this holiday season are shaping up to be much improved over last year.” (Food, Beverage & Tobacco Products)
  • “West Coast port issues have greatly impacted our incoming materials. We are air freighting many parts from Japan and Asia to support production while parts sit at the dock.” (Fabricated Metal Products)
  • “Class 8 trucks and RV business is very strong.” (Transportation Equipment)
  • “Most commodities feeling downward price pressure from crude. Rain in California driving demand for repair products through the roof.” (Petroleum & Coal Products)
  • “Business has not slowed as of yet, but outlook is that business should start slowing, energy market related.” (Computer & Electronic Products)
  • “Collapse of oil prices is supporting negotiations for significantly lower petrochemical related material prices. Sales are slowing down as buyers reduce inventory in anticipation of lower prices.” (Chemical Products)
  • “West Coast ports are creating delays for imported goods.” (Textile Mills)
  • “Energy prices falling are a blessing and a curse for us. We will experience downside as projects are canceled by energy companies, but suspect manufacturing in the US will improve driving upside in that space.” (Apparel, Leather & Allied Products)
  • “The West Coast ports slow-down is really affecting deliveries of our Asian purchases.” (Machinery)
  • “Currently in slow season until new year.” (Primary Metals)

To read the entire ISM Report, click here.

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Terry Mulreany
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