PMI’s increase in June indicates manufacturing stability
After nearly a decade of turmoil in the manufacturing sector, the June report from the Institute for Supply Management used a word the industry hasn’t seen in a while:
The June Purchasing Managers’ Index (PMI) for manufacturing rose to 53.5%, an increase of 0.7 percentage points from May. After a brief dip in the late winter that was largely attributed to weather disruptions, the PMI is back at the place it started in January—solidly above the 50% level for manufacturing growth—as manufacturers face very few challenges as the summer kicks into high gear.
"Comments from the panel indicate mostly stable to improving business conditions, with the notable exception relating to the oil and gas markets," said Bradley Holcomb, chairman of the ISM Business Survey Committee. "Also noted is the negative effect on egg prices and availability due to the avian flu outbreak."
Other indices showed similar improvements. The New Order Index rose 0.2 percentage points to 56.0% and the Employment Index was solidly higher, climbing 3.8 percentage points to 55.5%, indicating accelerated hiring in the manufacturing sector. While the Production Index slipped 0.5 percentage points to 54%, the figure was still solidly above the growth curve for the index.
Survey Committee members found plenty of good news in the monthly outlook. Among their comments:
- "Automotive industry remains strong and is expected to stay that way through 2015." (Fabricated Metal Products)
- "Business continues to hold in the U.S., (but is) soft in Europe and in decline in Asia." (Transportation Equipment)
- "Manufacturing business has improved slightly." (Chemical Products)
- "Slight improvement in defense spending on future business." (Computer & Electronic Products)
- "Most prices are stable and business is stable." (Nonmetallic Mineral Products)
- "Downturn in oil and gas markets impacting demand." (Miscellaneous Manufacturing)
- "Stable. Extra capacity available if more orders come in." (Textile Mills)
- "Business continues to be strong, with housing starts being up in our markets driving cabinet sales." (Furniture and Related Products)
The PMI was above the 50% level for the 30th straight month, indicating consistent growth in the manufacturing sector. It was also above the 43.1% threshold for overall economic growth for the 73rd straight month.