PMI Index rebounds to 59.0% in October
Manufacturing activity is now averaging 10% above its break-even level over the last 12 months, signaling a healthy sector that is driving economic growth and global stability.
The October PMI Index, published by the Institute for Supply Management (ISM), rebounded from a drop in September to hit 59.0%, the same high-water mark it had hit in August. That 59.0% is 9 percentage points higher than the Index’s 50% break-even level, and keeps manufacturing on a 17-month growth curve.
Over the past 12 months, the PMI Index has averaged 55.8%, and has finished above 55% for the last six months. After slower growth in the first part of the year, manufacturing has enjoyed sustained expansion since climbing above the 55% mark in May.
All of the components indices for the PMI also showed strong growth in October. The New Order Index was up 5.8 percentage points to 65.8%, the Production Index grew two-tenths of a point to a robust 64.8%, and the Employment Index grew for the 16th straight month to 55.5%, an increase of 0.9 percentage points.
Among the comments from PMI survey participants:
- "Holiday orders are exceeding seasonal forecasts. Customers are demanding additional quantities above prior orders. Fuel costs and other positive signals appear to be creating demand above normal." (Food, Beverage & Tobacco Products)
- "Weakness in commodity prices very positive on our business." (Fabricated Metal Products)
- "We continue to see strong demand across multiple sectors." (Transportation Equipment)
- "Business steady and strong." (Furniture & Related Products)
- "Another strong month in terms of business growth." (Computer & Electronic Products)
- "Most business segments are seeing an upward trend in orders – mostly from existing customers, but also some new customers. Transportation continues to be a major issue." (Chemical Products)
Since early 2009, the PMI has stayed above the 43.2% mark that indicates overall economy expansion. The most recent PMI numbers translate to a 4.1% increase in gross domestic product (GDP) for 2014, and a 5.2% increase in GDP if the October level were sustained for a full year.