PMI leaps to another new high for 2013

ISM Index hits 56.2 percent in September as manufacturing optimism grows

10/02/2013


Manufacturing demand and business condition are on the rise. And, for the fourth straight month, so is the manufacturing PMI.

The Institute for Supply Management’s September manufacturing index rose again in September to its highest levels in two years. The 56.2% PMI reading was 0.5 percentage points higher than August’s 55.7% reading. The index is up over 7% since it dipped to 49.0% in May. That’s the only time in 2013 the index has been below the 50% growth threshold of the PMI.

Other PMI indexes also were on the rise. The Employment Index, for example, climbed to 55.4%, a 2.1 percentage point increase and the highest level of the year.

“Comments from the panel are generally positive and optimistic about increasing demand and improving business conditions,” said Bradley J. Holcomb, chairman of the Institute for Supply Management Manufacturing Business Survey Committee.

The 56.2% PMI reading is further fueling optimism from some industries that the accelerated growth may continue through the end of the year. Among the comments in the monthly PMI report:

  • "Global sales generally trending moderately higher." (Textile Mills)
  • "Slight increase in demand. Forecast looks better. 4Q looking better than 3Q — should begin to see demand increase in October/November." (Food, Beverage & Tobacco Products)
  • "Raw materials shortages continue. General trends are up, which enhances shortage issues." (Wood Products)
  • "Rising costs of China labor has us re-evaluating our current position in that country." (Computer & Electronic Products)
  • "Steady increase in work this month." (Primary Metals)
  • "Overall business is picking up." (Transportation Equipment)
  • "Outlook remains strong with housing market and customer orders." (Electrical Equipment, Appliances & Components)

“The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (52.9%) corresponds to a 3.3% increase in real gross domestic product on an annualized basis,” Holcomb said. “If the PMI for September is annualized, it corresponds to a 4.4% increase in real GDP annually.”

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