Stock shock: Dow Jones tumbles, then rebounds after May PMI Index is corrected

Software error blamed for report of decline; monthly indexes all increased as index hits 55.4%.

06/02/2014


UPDATED at 3:45 p.m. CST Monday, June 2: The importance of the PMI Index each month was reflected Monday, June 2 when an erroneous report of a drop in the PMI sent stocks tumbling.

After initially reported that the May PMI Index fell by 1.5 percentage points, the Institute for Supply Management recalculated the numbers and found the index actually rose 0.5 percentage points to 55.4.

“We apologize for this error. We have recalculated and confirmed that the actual index indicates that the economy is accelerating,” said Bradley J. Holcomb, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee. “Our research team is analyzing our internal processes to ensure that this doesn’t happen again.”

ISM blamed the error on the use of a seasonal adjustment factor from the previous month. 

The report of the drop in PMI was unexpected by industry analysts, and the Dow Jones Industrial Average plunged on the news. The index fell 0.2% on the news, but once the error was corrected, the DJIA rebounded and finished the day on Monday by gaining 15 points to reach another new record high.

Even without the updated data, the PMI hit two important milestones in May. The index reported one full year of growth, and the index hit five full years of overall economic growth.

“Comments from the panel reflect generally steady growth, but note some areas of concern regarding raw materials pricing and supply tightness and shortages," Holcomb said.

Among the comments from ISM survey participants:

  • “Increasing demand for product is creating supply and sourcing challenges.” (Food, Beverage & Tobacco Products)
  • “Aviation is recovering and outlook is optimistic.” (Transportation Equipment)
  • “The improving gas prices are positively impacting our short term drilling plans.” (Petroleum & Coal Products)
  • “Political issues in Russia are not yet impacting our supply of raw materials from Russian suppliers.” (Computer & Electronic Products)
  • “Volumes picking up in some sectors, but profitability still elusive. Suppliers indicate similar difficulties in getting price increases.” (Chemical Products)
  • “Business has remained steady. However, this month has a more subdued disposition by comparison. Price escalation has leveled off with even a few decreases on selected items.” (Wood Products)
  • "Defense industry contracts are shrinking, customer is exercising minimum options, or less than minimum." (Miscellaneous Manufacturing)

The threshold for overall economic growth is a PMI Index above 43.2%, so May marked five full years of positive data.



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.