Manufacturing index rises in October

The Purchasing Manufacturers’ Index (PMI) rose to 51.9% with the manufacturing industry showing overall optimism and confidence in spite of a recent downturn and the Hanjin Shipping Company’s bankruptcy.
By Chris Vavra, CFE Media November 1, 2016

The Purchasing Manufacturers’ Index (PMI) rose to 51.9% with the manufacturing industry showing overall optimism and confidence in spite of a recent downturn and the Hanjin Shipping Company’s bankruptcy. Courtesy of: CFE MediaGood news continues for the manufacturing sector as the Institute for Supply Management’s Purchasing Manufacturers Index (PMI) October index registered 51.9%, which is a jump of 0.4% from September. Growth in employment, new orders, and production were the main reason for the index’s growth in October and there is general optimism in the manufacturing industry. A strong jump in new orders and production helped the manufacturing sector as a whole in September. The overall manufacturing economy grew for the 89th straight month.

The production index registered 54.6%, 1.8 percentage points higher than the September reading. The employment index registered 52.9%, an increase of 3.2 percentage points from the September reading. The prices index registered 54.5% in October, an increase of 1.5 percentage points from the September reading, indicating higher raw materials prices for the eighth consecutive month. Comments from the panel are largely positive citing a favorable economy and steady sales, with some exceptions.

"Comments from the panel are largely positive citing a favorable economy and steady sales, with some exceptions," said Bradley J. Holcomb, chairman of the Institute for Supply Management’s (ISM) Manufacturing Business Survey Committee.

The October reports also included a question regarding the Hanjin Shipping Company bankruptcy to gain insights into the impact on their businesses this quarter. The responses were as follows:

  • Not impacted – 51.9%
  • Small, not material impact – 29.7%
  • Material, but manageable impact – 13.4%
  • Large material impact – 0.8%
  • Unsure – 4.2%

Responses from the manufacturers in October include:

  • "Domestic business steady. Export business trending higher." (Chemical Products)
  • "Very favorable outlook in the market." (Computer & Electronic Products)
  • "We are looking at a considerable slowdown for October and November. Production is down 20 percent." (Primary Metals)
  • "Business is much better." (Fabricated Metal Products)
  • "Strong economy driving steady sales." (Food, Beverage & Tobacco Products)
  • "Due to the hurricane and other storms, our business is up significantly." (Machinery)
  • "Ongoing strength seen in 2016 — it’s a good year." (Miscellaneous Manufacturing)
  • "Customers continue to press price reductions." (Transportation Equipment)
  • "Our business remains strong." (Plastics & Rubber Products)
  • "Hard to predict oil price dynamics, but there seems to be a consensus that the market is stabilizing, at least above USD 50 bbl this month." (Petroleum & Coal Products)

Chris Vavra, production editor, CFE Media, cvavra@cfemedia.com.