Weather or not, PMI Index hits the skids in January
Manufacturing output plunged with the cold weather in January, as the monthly Institute for Supply Management PMI Index plunged 5.2 percentage points to its lowest point since May 2013, and analysts and industry experts gave part of the blame to the brutal winter weather throughout much of the country.
While the 51.3% PMI figure still represents growth overall for the manufacturing sector, it was a significant step back for the index, which was at 56.5% in December and has hovered above 56.0% for the last five months.
The report, released Feb. 3, shows steps back across all areas of the index. The New Order Index plummeted from 64.4% to 51.2%, and the Production Index dropped from 61.7% to 54.8%.
“A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January, while others reflect optimism and increasing volumes in the early stages of 2014,” said Bradley J. Holcomb, CPSM, CPSD, chairman of the Institute for Supply Management Manufacturing Business Survey Committee.
Survey participants remained generally upbeat about the state of manufacturing. Among the comments:
- "We are seeing slight improvements, year-over-year, month-to-month, across most regions and business segments."
- "Poor weather impacted outbound and inbound shipments."
- "Good finish to 2013, but slow start to 2014, mostly attributed to weather." (Petroleum & Coal Products)
- "U.S. government aerospace business is very brisk."
- "We have experienced many late deliveries during the past week due to the weather shutting down truck lines." (Plastics & Rubber Products)
- "We continue to be busy, working six days, 24 hours a day."
There was one small, but significant adjustment in the overall PMI for 2013. In May 2013, the index was reported at 49.0%, a figure that is below the 50% threshold that would indicate manufacturing growth for that month. In the figures released Feb. 3, the May figure was adjusted to 50%, exactly at the level for growth. At the same time, the PMI for April was seasonally adjusted down from 50.7% to 50%. The result is 12 months of a PMI Index at or above the growth rate.
As it corresponds to overall economic growth, this month’s PMI marks the 56th straight month of economic growth. “The past relationship between the PMI and the overall economy indicates that the PMI for January corresponds to a 2.7% increase in real gross domestic product (GDP) on an annualized basis.”