PMI growth rate slips, but stays strong
September index slips to 56.6%, but stays on solid path overall.
After a streak of increases throughout 2014, the monthly PMI manufacturing index from the Institute for Supply Management was due for a pause.
The PMI slipped from its 12-month high of 59.0% in August to 56.6% in September, according to the report released Oct. 1. The figure still represents a continuation of the 16-month streak above the 50% threshold for manufacturing growth.
Still, the underlying data showed a slowing of growth for new orders and employment, while the Production Index remained flat.
"Inventories of raw materials registered 51.5%, a decrease of 0.5 percentage points from the August reading of 52%, indicating growth in inventories for the second consecutive month," said Bradley Holcomb, chairman of the ISM's Manufacturing Business Survey Committee.
"Comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest."
Among the comments from committee members:
- "Business seems to be picking-up as fuel prices drop. More disposable income at the C store level where many of our products are sold." (Food, Beverage & Tobacco Products)
- "World political unrest is creating additional defense requirements." (Transportation Equipment)
- "We are seeing shipments up, year-over-year, in the 8% to 10% range for last couple of months. This is good." (Apparel, Leather & Allied Products)
- "Seen an increase in sales due to government fiscal year-end." (Computer & Electronic Products)
- "Demand is pretty good overall. Freight continues to be a major issue." (Chemical Products)
- "Things are a bit slower than the first half." (Printing & Related Support Activities)
- "Outlook is very good. Demand seems to be growing." (Paper Products)
- "Our search continues for good machinists and electrical engineers." (Machinery)
- "Overall, orders are at the strongest point this year." (Miscellaneous Manufacturing)
Holcomb noted that the PMI remained well above the 43.2% figure that indicates general overall growth, and that it marked 4 straight months above that level. "The average PMI for January through September (55.2%) corresponds to a 4.0% increase in real gross domestic product (GDP) on an annualized basis," Holcomb said in a press release. "If the PMI for September (56.6%) is annualized, it corresponds to a 4.4% increase in real GDP annually."
- Bob Vavra is content manager, Plant Engineering, CFE Media. Edited by CFE Media, Control Engineering, Plant Engineering.
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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