PMI rises for fourth straight month, hits 12-month high
Manufacturing continued its rally in 2016, as the Institute of Supply Management’s (ISM) monthly index of manufacturing growth surged 1.9 percentage points to a 12-month high.
The June purchasing manufacturers’ index (PMI) hit 53.2% as new orders and production continued to improve and manufacturers across the majority of industries surveyed continued to see solid growth.
Since plunging to 48.0% in December 2015, the PMI has shown steady improvement. It crossed the 50% threshold for manufacturing growth in March 2016, and June marked the fourth straight month of growth for the sector.
"Twelve of our 18 industries reported an increase in new orders in June (down from 14 in May), and 12 of our 18 industries reported an increase in production in June (same as in May)," said Bradley J. Holcomb, chairman of ISM’s Manufacturing Business Survey committee.
While many committee members surveyed still are looking for stronger growth, most seemed satisfied with the current state of their businesses. Among the comments:
- "We are gaining new customers through better sales management." (Food, Beverage & Tobacco Products)
- "Slower shipments because of weather-related flooding." (Chemical Products)
- "Conditions have remained steady from (the) past month and are in line with our forecast." (Computer & Electronic Products)
- "Very good start of summer for business levels/orders." (Fabricated Metal Products)
- "Business is steady with some signs of increase." (Machinery)
- "Business is still strong, but slowing slightly." (Transportation Equipment)
- "Business conditions are good, production and demand are stable." (Miscellaneous Manufacturing)
- "Orders are slowing from China. American customers still steady." (Primary Metals)
- "Demand continues to be robust." (Plastics & Rubber Products)
- "Business is still slower than expected." (Nonmetallic Mineral Products)
The increase in the PMI in June pushed the 12-month average over the 50% growth threshold, and overall, the 53.2% level translates to a 3.2% annual growth rate in gross domestic product, Holcomb said.
Bob Vavra is content manager, Plant Engineering, CFE Media, email@example.com.