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

Good 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,