PMI continues slide due to global economic concerns
The Purchasing Managers' Index (PMI) from the Institute for Supply Management (ISM) slid to its lowest level in over two years due to global economic concerns and overall consumer confidence.
The August decline of the monthly Purchasing Manufacturers' Index (PMI) from the Institute for Supply Management (ISM) continued into September. The PMI fell to 50.2% in September, down from August's 51.1% reading and the lowest level for the PMI since a 50.1% reading in May 2013. Even though the underlying growth in the manufacturing sector continues, the continued slide is reflective of concerns about the global economy, a strong US dollar, and low oil and gas prices.
All major indices that make up the PMI were lower in August, including a 1.6 percentage point drop in the New Order Index to 50.1% and the Production Index dropped 1.8 percentage points to 51.8%.
While any figure above 50% in the PMI indicates growth in manufacturing ISM manufacturing business survey committee chairman Bradley Holcomb said the global markets and customer confidence remained an issue. "The New Export Orders Index registered 46.5 percent, the same reading as in August. Comments from the panel are mixed with some concern about the global economy and customer confidence," said Holcomb in a press release.
Among the comments from committee members:
- "Revenues and profits in our industry continue to [be] impacted by low crude and gas prices." (Petroleum & Coal Products)
- "North American business steady. International business trending bearish." (Chemical Products)
- "High value of dollar is affecting global procurement pricing." (Computer & Electronic Products)
- "Concerns about China downturn and its effect on our consumer confidence." (Fabricated Metal Products)
- "Overall business is slowing. Consumers are nervous. Not sure what is coming next." (Transportation Equipment)
- "Business is picking up." (Furniture & Related Products)
- "The orders from customers seem to be slowing a bit from the first part of the year. We have promises but not actual Purchase Order numbers." (Nonmetallic Mineral Products)
- "Sales revenue and profitability improving slowly. Getting close to 2015 budget/sales plan. Not seeing consistent trends up or down." (Electrical Equipment, Appliances & Components)
- "Continue to feel impact of oil and gas market slowdown. Aerospace demand has also been slower than expected. Consumer Electronics not robust." (Primary Metals)
- "Concern for AI [Avian Influenza] for poultry when bird migration begins." (Food, Beverage & Tobacco Products)
- Chris Vavra, production editor, CFE Media, email@example.com.
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Annual Salary Survey
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