PMI hits 14-year high in February
Index jumps to 60.8% as production, employment expands.
The February PMI Index reached a 14-year high, jumping 1.7 percentage points 60.8%. The Index is now more than 20% above its growth level of 50%, and finished above 58% for the seventh straight month.
Driven by continued strength in new orders and high production levels, the PMI, produced monthly by the Institute for Supply Management (ISM) hit its highest point since a 61.4% reading in May 2004.
“Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a faster rate to support production; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in February,” said Timothy R. Fiore, chairman of the ISM Manufacturing Business Survey Committee. “Price increases occurred across most industry sectors. Capital expenditure lead times improved by five days while production material supplier lead times extended four days during the month of February.”
Among the comments from panel members:
“Availability of electronic components, long lead times, allocations and constraints continue to wreak havoc in the purchasing cycle, with no end in sight at this time.” (Computer & Electronic Products)
“Our business saw (an) increase in fourth quarter, and it continued in January 2018. CapEx purchase deliveries are moving out globally.” (Chemical Products)
“Labor market continues to be tight for supply chain talent in the Southern California area. Overall economy is strong.” (Transportation Equipment)
“Employment is one of our biggest challenges. No labor available.” (Food, Beverage & Tobacco Products)
“Steel market is doing rather well. Everybody is out of what I need.” (Fabricated Metal Products)
“It seems the tax break for business is making a difference. Customers are spending more for capital equipment.” (Machinery)
“Hiring has picked up for direct-hire employees. Due to end-of-2017 performance and improvement in commodity price, there has been an increase in capital budget.” (Petroleum & Coal Products)
“Business is very strong, and our lines are running at full capacity.” (Plastics & Rubber Products)
“We expect to have a strong year in 2018. In expectation, we have added to our sales staff and plan on adding to our production staff.” (Miscellaneous Manufacturing)
“The weakening U.S. dollar in relationship to the yuan is starting to impact importing cost. We are starting to see more supplier price increases.” (Electrical Equipment, Appliances & Components)
The February reading marked the 18th straight month of manufacturing growth, which is when the PMI is above 50%. When the index is above 43.2%, it signals growth in the overall economy, and the PMI has been above that level for more than eight years.
PMI: THE LAST 12 MONTHS
Average for 12 months – 58.0
Bob Vavra is content manager for Plant Engineering at CFE Media.