ISM shows manufacturing growing at a quicker pace
Index of 54.1 jumps 1.0 percentage points from December
Economic activity in the manufacturing sector expanded in January for the 30th consecutive month, and the overall economy grew for the 32nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The PMI registered 54.1%, an increase of 1 percentage point from December's seasonally adjusted reading of 53.1%, indicating expansion in the manufacturing sector for the 30th consecutive month,” Holcomb said. “The New Orders Index increased 2.8 percentage points from December's seasonally adjusted reading to 57.6% reflecting the 33rd consecutive month of growth in new orders. Prices of raw materials increased for the first time in the last four months. Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January.”
Manufacturing continued its growth in January as the PMI registered 54.1% an increase of 1 percentage point when compared to December's seasonally adjusted reading of 53.1%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
A PMI in excess of 42.6% over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 32nd consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 30th consecutive month. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the PMI for January (54.1%) corresponds to a 3.9% increase in real gross domestic product on an annualized basis."
ISM's New Orders Index registered 57.6% in January, which is an increase of 2.8 percentage points when compared to the seasonally adjusted December reading of 54.8% and represents a continuation of growth for the 33rd consecutive month. (Due to ISM's seasonal adjustments, this index now demonstrates growth for the past 33 consecutive months.) A New Orders Index above 52.3% over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant $2,000).
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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey