PMI Index hits three-year high
“Awesome” results from manufacturing as benchmark climbs to 59.0%
You can look at another high data point for the monthly PMI Index released Sept. 2 by the Institute for Supply Management as indication of the continued strength of the U.S. manufacturing sector. Or you can take the word of one manufacturing respondent in the primary metals markets, who called August, the "strongest month in years. Business is solid. Awesome!"
The PMI Index jumped to 59.0% in August, climbing 1.9 percentage points from July's healthy 57.1% figure. It was the highest the PMI Index has reached since a 59.1% reading in March 2011. The growth was driven from another healthy climb in the New Orders Index, which rose 3.3 percentage points to 66.7%.
"The August PMI is led by the highest recorded New Orders Index since April 2004 when it registered 67.1%," said Bradley Holcomb, chairman of the Institute for Supply Management's Manufacturing Business Survey Committee. "At the same time, comments from the panel reflect a positive outlook mixed with caution over global geopolitical unrest."
Other PMI-related indices also rose in August. The Production Index was up 3.3 percentage points to 64.5%, the Employment Index was roughly unchanged at a strong 58.1%, and the Raw Material Index reversed a one-month decline with an increase of 3.5 percentage points to 52.0%. Any figure about 50% indicates growth for the sector.
Survey respondents were almost universally positive. Among the comments:
- "Business is looking good for food manufacturing. Packaging materials prices are staying in check, minimum wage is up a bit, but manageable." (Food, Beverage & Tobacco Products)
- "The commercial building business is good, our business is up." (Fabricated Metal Products)
- "Overall business conditions are flat. World issues taking a toll on business. Consumers are cutting back on spending."" (Transportation Equipment)
- "Overall business is improving. Order backlog is increasing. Quotes are increasing. Much more positive outlook in our sector." (Electrical Equipment, Appliances & Components)
- "Demand in the United States is consistent and geopolitics remain a concern." (Chemical Products)
- "Business is strong. Labor is becoming a difficult issue." (Furniture & Related Products)
- "Demand is strong. Numbers are up over last year." (Machinery)
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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