Manufacturing ends 2017 with another strong performance

PMI jumps to 59.7% in December and finishes the year up more than 15%.
By Bob Vavra, Content Manager, CFE Media January 3, 2018

Image courtesy: Bob VavraManufacturing ended 2017 with a surge that matched the increase in retail spending at Christmas. The monthly PMI Index from the Institute for Supply Management (ISM) jumped 1.5 percentage points to 59.7% in December, reversing a small decline in the previous two months and tickling the 60.0% mark that would indicate growth 20% above the baseline average.

The New Orders Index jumped 5.4 percentage points in December to 69.4%, leading a series of indicators that pointed toward continued strength in the manufacturing sector.

“Comments from the panel reflect expanding business conditions, with new orders and production leading gains; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow in December,” said Timothy, Fiore, chairman of the ISM’s Manufacturing Business Survey Committee. “Supplier deliveries continued to slow (improving) at a faster rate, and inventories continued to contract at a slower rate during the period. Price increases continued at a faster rate.”

The comments from committee members reflected a general confidence about the health of the sector, and pointed toward a strong start to 2018. Among the comments:

    PMI over the last 12 months.

  • “Our business is moving higher into the new year. Increased sales are resulting in increased purchases of CapEx and raw materials.” (Chemical Products)
  • “Strong international sales — Europe and Australia — versus last two years. U.S. sales continue to grow. Seeing commodity pricing pressures.” (Machinery)
  • “We are seeing a ramp-up with companies releasing early 2018 spend now.” (Computer & Electronic Products)
  • “Business conditions are good; we are tracking well to our projections for the year.” (Miscellaneous Manufacturing)
  • “First quarter 2018 probably will be better than the fourth quarter 2017.” (Fabricated Metal Products)
  • “Domestic and international sales on the rise.” (Transportation Equipment)
  • “Economy (is) strong and business is strong, yet signals of headwinds in 2018 are persistent.” (Food, Beverage & Tobacco Products)
  • “All suppliers are reporting strong business activity and difficulties obtaining qualified employees.” (Paper Products)
  • “Demand at this time is strong in the construction part of our business. I think it is due to the impact of the hurricanes and the rebuild and new construction that is required.” (Plastics & Rubber Products)

The PMI’s December reading what the 16th straight month the index finished above the 50% threshold for growth, and was the seventh straight month the index topped 55%, indicating 10% growth for manufacturing. For the year, the PMI averaged more than 15% growth, with the average PMI coming in at 57.6%.

Bob Vavra is the content manager for Plant Engineering.