Manufacturing index jumps to 12-month high in November

ISM reports some headwinds for manufacturing, but index climbs 1.3 percentage points to 53.2%

12/01/2016


Image courtesy: CFE MediaManufacturing's leading index hit its highest level in the last year in November, buoyed by an increase in new orders and production.

The Institute for Supply Management (ISM) monthly purchasing manufacturers' index (PMI) hit 53.2% in November, a jump of 1.3 percentage points from the 51.9% mark in October and the same level as the PMI hit in June 2016. After struggling at the end of 2015, the PMI Index has been above the 50% break-even point for manufacturing growth for all but one month since March 2016, and the November index was the third straight month of growth.

Even so, there were some concerns heading toward the end of the year, according to Bradley J. Holcomb, chairman of the ISM Manufacturing Business Survey Committee. "Comments from the panel cite increasing demand, some tightness in the labor market and plans to reduce inventory by the end of the year," Holcomb said in a press release.

There were eleven of the 18 product segments studied by ISM that grew in November. In order, they include:

  • Miscellaneous manufacturing
  • Petroleum and coal
  • Paper
  • Computer and electronics
  • Food, beverage and tobacco
  • Chemicals
  • Fabricated metals
  • Plastics and rubber
  • Machinery
  • Nonmetallic minerals
  • Primary metals.

Comments from committee members indicated both the optimism in certain segments as well as some caution. Among the comments:

  • "Raw materials have been rather flat. Ramping up for year-end and reducing inventory is main supply chain goal at this time." (Chemicals)
  • "Strong manufacturing numbers in anticipation of strong year-end bookings." (Computer and electronics)
  • "Business is still steady. We are foregoing our shutdown over Christmas break due to an increase in customer orders." (Plastics and rubber)
  • "Heading into 2017, our business levels look pretty consistent compared to 2016." (Primary metals)
  • "Sector remains strong, orders and forecasts are consistent and demand outlook is positive." (Food, beverage and tobacco)
  • "New spec buildings going up in our area. Local companies adding additional production space which equates to higher employment." (Machinery)
  • "Business conditions are good. Labor market is tightening such that it is difficult to staff to completely fulfill production demand." (Miscellaneous manufacturing)
  • "We are seeing an upswing in customer requests for quotations this month; this is a positive sign for our business." (Textile mills)
  • "Continued strong seasonal demand for product." (Nonmetallic minerals)
  • "2017 is looking to be a very busy year." (Fabricated metals)

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

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