New orders, employment bolster November PMI

Index at 58.7%, marking 18 straight months of growth for manufacturing.

12/01/2014


With new orders and employment continuing to show strong growth, the monthly PMI Index from the Institute of Supply Management (ISM) continued its high-wire act in November. While the index slipped three-tenths of a point in November, the 58.7% PMI Index reading still is more than 17% above the break-even level of 50% and marks the seventh straight month the index has finished above 55%.

The New Orders Index rose again in November to 66.0%, a two-tenths increase from October. The Employment Index showed growth for the 17th straight month, checking in at 54.9%. As both of these are happening, the Price Index fell to 44.5%, a drop of 9 percentage points from October. The report noted, "This is the first time that raw materials prices have registered a decrease since July 2013 when the Prices Index registered 49%."

"Comments from the panel are upbeat about strong demand and new orders, with some expressing concerns about West Coast port slowdowns and the threat of a potential dock strike," said ISM Manufacturing Business Survey Committee chairman Bradley Holcomb. Otherwise, the manufacturing surge over the past year shows little signs of abating as 2014 comes to a close.

The Institute for Supply Management's PMI Index slipped fractionally to 58.7, marking the seventh straight month the index has finished above 55%. Courtesy: Institute for Supply ManagementAmong the comments:

  • "The holiday season continues to exceed expectations. Customers are generally optimistic for future sales growth." (Food, Beverage & Tobacco Products)
  • "Continued strong demand. Deliveries through the West Coast are delayed due to a number of factors." (Fabricated Metal Products)
  • "We have seen continued growth in transportation equipment. Slowdowns and threats of strike of West Coast longshoreman weigh heavily on U.S. operations." (Transportation Equipment)
  • "Business continues to be stronger than last year." (Furniture & Related Products)
  • "Improvement in defense spending and manufacturing." (Computer & Electronic Products)
  • "We continue to hire people. People are also leaving to take other jobs indicating the job market is starting to improve for manufacturing." (Electrical Equipment, Appliances & Components)
  • "Market has remained strong going into year-end." (Wood Products)
  • "Order intake has been substantial, resulting in a very healthy backlog. The packaging automation requirements in the food and beverage market are robust." (Machinery)

The PMI Index has now stayed above the 50% growth level for 18 straight months, and the index hit the 5 ½-year growth market for overall economic growth. "The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (55.8%) corresponds to a 4.2% increase in real gross domestic product (GDP) on an annualized basis," Holcomb said in a statement. "In addition, if the PMI for November (58.7%) is annualized, it corresponds to a 5.1% increase in real GDP annually."



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