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PMI jumps to a 3-year high in June

Manufacturing index hits 57.8% as production, new orders soar

By Bob Vavra, CFE Media July 10, 2017

Manufacturing output surged in June to a three-year high, led by dramatic increases in new orders and production. The Institute for Supply Management’s purchasing manufacturers’ index (PMI) jumped 2.9 percentage points to 57.8% in June, the highest reading since the index hit 57.9% in August 2014. June was the 10th consecutive month the index finished above 50%, the threshold for manufacturing growth.

Timothy R. Fiore, chairman of the Institute for Supply Management’s Manufacturing Business Survey Committee, said the index’s component parts grew across the board. "Comments from the panel generally reflect expanding business conditions; with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace."

The New Orders Index jumped 4 percentage points to 63.5%, while the Production Index climbed 5.3 percentage points to 63.5%. The Employment Index also increased sharply, up 3.7 percentage points to 57.2%.

Among the comment from committee members:

  • "Overall, business is strong. We are seeing price increases for packaging and handling materials as well as some MRO supplies." (Plastics & Rubber Products)
  • "Overall, demand is up 5% to 7% and expected to continue through the end of the year, at least." (Transportation Equipment)
  • "Demand is picking up; meeting budget expectations." (Electrical Equipment, Appliances & Components)
  • "Business is still very robust. Have continued to hire to match increased demand." (Computer & Electronic Products)
  • "Business globally continues to show improvement." (Chemical Products)
  • "Environmental regulations have strong effects on our business. We continue to watch for any changes as a result of the new (U.S.) administration." (Paper Products)
  • "International business outside North America on the upswing." (Machinery)
  • "Metal pricing continues to drag down our profit margins, but we are very busy quoting new business, so our customers have a good outlook on the rest of the year." (Fabricated Metal Products)
  • "Business is strong both domestically and internationally. Supplier deliveries are quick domestically, international supply chain is slowing. We are in a hiring mode." (Food, Beverage & Tobacco Products)

The June increase also marked 97 consecutive months of overall economic growth, finishing more than 33% above the economic growth mark of 43.3%.

Bob Vavra, content manager, CFE Media, bvavra@cfemedia.com