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Manufacturing is booming: PMI hits 13-year high

September’s 60.8 reading is 20% above growth level as prices continue to climb.

By Bob Vavra, Content Manager, CFE Media October 2, 2017
Manufacturing is booming.
The Institute for Supply Management’s monthly PMI Index marked its 100th straight month of manufacturing growth in September by jumping 2 percentage points to 60.8%. The September reading is the highest in 13 years, and is more than 20% above the 50% PMI level that indicates growth in manufacturing. 
It’s the 13th straight month that the PMI has been above 50%. The last time the index was at this level was May 2004, when it reached 61.4%. There continues to be optimism among the manufacturers in the PMI survey group. “Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September; as well as, supplier deliveries slowing (improving) and inventories growing at a slower rate during the period,” said Timothy R. Fiore, chairman of the Institute for Supply Management’s Manufacturing Business Survey Committee. “The Customers’ Inventories Index remains at low levels."
The New Orders index rose 4.3 percentage points to 64.6%, the Production Index increased 1.2 percentage points to 62.2% and the Employment Index was up 0.4 percentage points to 60.3%. The Prices Index had the highest increase, jumping 9.5 percentage points to 71.5%, indicating higher raw material prices. It was the 19th straight month of price increases, according to the index.
In their monthly comments, survey members expressed concerns about the impact of the recent Gulf and Atlantic hurricanes. Among the comments:
  • "Hurricanes causing supply chain and pricing issues." (Chemical Products)
  • "Business levels continue strong; usually by now, a seasonal downturn begins." (Machinery)
  • "Energy sector (oil and gas) continues to be strong. Price of oil appears to be beginning to stabilize." (Computer & Electronic Products)
  • "We’ve had a very good year and we are forecasting continued strong demand for our product in 2018." (Miscellaneous Manufacturing)
  • "Business is strong. However, we are concerned about price increases due to the hurricanes." (Plastics & Rubber Products)
  • "We are closely watching the Houston events as many of our production chemicals are produced in the Gulf region. Some tightening of supply and/or price increases expected." (Paper Products)
  • "Labor shortages continue to haunt operational capacity both at [the] local plant [level] and up and down the supply chain."(Transportation Equipment)
  • "Hurricanes Harvey and Irma will have significant effects on input costs. Disruption in supply chain. Concerns of transportation." (Food, Beverage & Tobacco Products)
  • "Hurricane Harvey, and now Irma, have impacted the business (building materials). Increasing sales but also causing significant price increases on input raw materials.”  (Nonmetallic Mineral Products) 

Bob Vavra is the Content Manager for Plant Engineering at CFE Media.