PMI growth rate slips, but stays strong
After a streak of increases throughout 2014, the monthly PMI manufacturing index from the Institute for Supply Management was due for a pause.
The PMI slipped from its 12-month high of 59.0% in August to 56.6% in September, according to the report released Oct. 1. The figure still represents a continuation of the 16-month streak above the 50% threshold for manufacturing growth.
Still, the underlying data showed a slowing of growth for new orders and employment, while the Production Index remained flat.
"Inventories of raw materials registered 51.5%, a decrease of 0.5 percentage points from the August reading of 52%, indicating growth in inventories for the second consecutive month," said Bradley Holcomb, chairman of the ISM’s Manufacturing Business Survey Committee.
"Comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest."
Among the comments from committee members:
- "Business seems to be picking-up as fuel prices drop. More disposable income at the C store level where many of our products are sold." (Food, Beverage & Tobacco Products)
- "World political unrest is creating additional defense requirements." (Transportation Equipment)
- "We are seeing shipments up, year-over-year, in the 8% to 10% range for last couple of months. This is good." (Apparel, Leather & Allied Products)
- "Seen an increase in sales due to government fiscal year-end." (Computer & Electronic Products)
- "Demand is pretty good overall. Freight continues to be a major issue." (Chemical Products)
- "Things are a bit slower than the first half." (Printing & Related Support Activities)
- "Outlook is very good. Demand seems to be growing." (Paper Products)
- "Our search continues for good machinists and electrical engineers." (Machinery)
- "Overall, orders are at the strongest point this year." (Miscellaneous Manufacturing)
Holcomb noted that the PMI remained well above the 43.2% figure that indicates general overall growth, and that it marked 4 straight months above that level. "The average PMI for January through September (55.2%) corresponds to a 4.0% increase in real gross domestic product (GDP) on an annualized basis," Holcomb said in a press release. "If the PMI for September (56.6%) is annualized, it corresponds to a 4.4% increase in real GDP annually."
– Bob Vavra is content manager, Plant Engineering, CFE Media. Edited by CFE Media, Control Engineering, Plant Engineering.