PMI jumps again to new high for the year
Index hits 57.3% as strength in orders, hiring continues manufacturing’s surge
A change in seasons hasn’t slowed down manufacturing growth. In fact, there doesn’t seem to be much of anything slowing down the manufacturing sector.
The Institute for Supply Management’s PMI Manufacturing report for November registered its sixth straight increase, jumping almost a full percentage point to 57.3%. Industry analysts had expected a flat-to-lower report for November, but a strong surge in new orders and hiring helped propel the PMI to a new high for the year.
“The PMI has increased progressively each month since June,” said Bradley Holcomb, chairman of the ISM’s Manufacturing Business Survey Committee. “The New Orders Index increased in November by 3 percentage points to 63.6%, and the Production Index increased by 2 percentage points to 62.8%. The Employment Index registered 56.5%, an increase of 3.3 percentage points compared to October's reading of 53.2%. This reflects the highest reading since April 2012 when the Employment Index registered 56.8%.
“With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing,” Holcomb added.
Industry leaders also are bullish on the growth trajectory for manufacturing. Among the comments reported in the PMI report:
- "Seasonal demand has not decreased at the typical pace." (Primary Metals)
- "Incoming order rate remaining strong." (Fabricated Metal Products)
- "Outlook for the remainder of the year and into 2014 is trending positive." (Chemical Products)
- "Overall business climate is good. Business is steady." (Transportation Equipment)
- "Sequestration and cutbacks in defense spending continue to impact business." (Computer & Electronic Products)
- "Market continues to be stronger than normal for this time of year." (Wood Products)
- "Getting much busier toward the end of the year." (Furniture & Related Products)
- "Seeing consistent uptick in demand." (Food, Beverage & Tobacco Products)
- "Ordering for 2014 seems to be increasing in comparison to the past six months." (Miscellaneous Manufacturing)
Since the PMI dropped below the growth threshold of 50% with a 49.0% reading in May, the index has risen almost 17%. The PMI has been above 50% in every month but May this year, and has been above the 52% mark since June.
The overall economy has growth for the last 4 ½ years, according to the PMI, as a reading above 42.2 % reflects an increase in the overall economy, Holcomb said. “The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (53.7%) corresponds to a 3.6% increase in real gross domestic product (GDP) on an annualized basis,” he said. “In addition, if the PMI for November (57.3%) is annualized, it corresponds to a 4.7% increase in real GDP annually.”
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