PMI Index rebounds to 59.0% in October
All segments show strength as manufacturing continues 2014 growth spurt
Manufacturing activity is now averaging 10% above its break-even level over the last 12 months, signaling a healthy sector that is driving economic growth and global stability.
The October PMI Index, published by the Institute for Supply Management (ISM), rebounded from a drop in September to hit 59.0%, the same high-water mark it had hit in August. That 59.0% is 9 percentage points higher than the Index's 50% break-even level, and keeps manufacturing on a 17-month growth curve.
Over the past 12 months, the PMI Index has averaged 55.8%, and has finished above 55% for the last six months. After slower growth in the first part of the year, manufacturing has enjoyed sustained expansion since climbing above the 55% mark in May.
All of the components indices for the PMI also showed strong growth in October. The New Order Index was up 5.8 percentage points to 65.8%, the Production Index grew two-tenths of a point to a robust 64.8%, and the Employment Index grew for the 16th straight month to 55.5%, an increase of 0.9 percentage points.
Among the comments from PMI survey participants:
- "Holiday orders are exceeding seasonal forecasts. Customers are demanding additional quantities above prior orders. Fuel costs and other positive signals appear to be creating demand above normal." (Food, Beverage & Tobacco Products)
- "Weakness in commodity prices very positive on our business." (Fabricated Metal Products)
- "We continue to see strong demand across multiple sectors." (Transportation Equipment)
- "Business steady and strong." (Furniture & Related Products)
- "Another strong month in terms of business growth." (Computer & Electronic Products)
- "Most business segments are seeing an upward trend in orders - mostly from existing customers, but also some new customers. Transportation continues to be a major issue." (Chemical Products)
Since early 2009, the PMI has stayed above the 43.2% mark that indicates overall economy expansion. The most recent PMI numbers translate to a 4.1% increase in gross domestic product (GDP) for 2014, and a 5.2% increase in GDP if the October level were sustained for a full year.
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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