Dock slowdown has impact on sliding PMI

Despite settlement, the monthly PMI index drops to 12-month low at 52.9%.

By Bob Vavra, Content Manager, CFE Media March 2, 2015

The announced settlement of the West Coast dock workers slowdown came a little too late to boost the Institute for Supply Management’s (ISM) monthly PMI Index in February.

The dock slowdown on the West Coast got most of the blame as the PMI fell from 53.5% in January to 52.9% in February. The February PMI was the index’s lowest level in more than a year and marked the fourth straight month of decline, but it still was solidly above the growth line of 50%, where it has been for the past 26 months.

"Comments from the panel express a growing level of concern over the West Coast dock slowdown, negatively impacting exports and imports and requiring workarounds and added costs," said Bradley J. Holcomb, chairman of the Institute for Supply Management’s Manufacturing Business Survey Committee, which produces the monthly index.

A deal between dock workers and interests for shipping companies and terminal operators was announced on February 21. The deal ends a nine-month slowdown at West Coast ports. While normal dock work now will resume, a massive backlog of goods still sits on inbound and outbound ships.

Committee members were especially aware of the impact of the slowdown in their monthly comments. Committee members in the food and beverage, transportation equipment, computers and electronics and machinery sectors all cited the dock slowdown as a significant factor.

"West Coast port congestion and work slowdowns by the union is hurting our imports and exports, (and) getting worse by the week," said one manufacturer.

That issue aside, however, the general tone for manufacturing was again solid. "One manufacturer said the sector is "improving, and 2015 is off to a good start."

The February PMI corresponds to an annual 3.1% increase in gross domestic product. The index continues to average more than 10% higher than its break-even point, at 55.7% over the past 12 months.