Outside forces cause fifth straight drop in PMI index

Pressures from oil prices, a weaker dollar and the West Coast dock strike weigh down index; PMI falls to 51.5% in March. The PMI remained above the 50% growth threshold for the index to extend the streak to almost six years; the 51.5% PMI for March still translates to a 2.6% growth in gross domestic product for the year.

04/01/2015


Pressures from oil prices, a weaker dollar and the West Coast dock strike weigh down the Institute for Supply Management's index for the fifth straight month as it fell to 51.5% in March. Courtesy: CFE MediaThe measuring stick for U.S. manufacturing declined for the fifth straight month in March, dropping to its lowest point in two years. The Institute of Supply Management PMI Index fell to 51.5% from 52.9% in February, as industry experts suggest a combination of labor, economic and environmental issues all put pressure on the manufacturing landscape. The PMI remained above the 50% growth threshold for the index to extend the streak to almost six years; the 51.5% PMI for March still translates to a 2.6% growth in gross domestic product for the year.

Since hitting a six-year high in August 2014 at 58.1%, the PMI Index has leveled off and then slumped. The fundamental causes of the drop, according to theInstitute of Supply Management's Manufacturing Business Survey Committee, is a combination of issues that don't have anything directly to do with manufacturing operations.

"Comments from the panel refer to continuing challenges from the West Coast port issue, lower oil prices having both positive and negative impacts depending upon the industry, residual effects of the harsh winter, higher costs of healthcare premiums, and challenges associated with the stronger dollar on international business," said Bradley S. Holcomb, chairman of the committee.

In fact, half of the 18 reporting industries reported growth in March, raw material prices fell for the fifth consecutive month and the Production Index was unchanged. 

Among the comments from committee members:

  • "Falling energies have helped on the cost side while sales are getting a boost through improvements in consumer disposable income." (Food, Beverage & Tobacco Products)
  • "Our business is still strong and on projection. Dollar strength is challenging for our international business." (Fabricated Metal Products)
  • "Business is still extremely strong." (Transportation Equipment)
  • "Oil prices impacting drilling and project activity. Pursuing cost reductions from suppliers for a wide variety of goods and services." (Petroleum & Coal Products)
  • "Business really starting to slow down. Oil pricing is having a major effect on energy markets." (Computer & Electronic Products) 
  • "Operating costs are higher due to increases in healthcare premiums." (Miscellaneous Manufacturing)
  • "March business is improving over Jan-Feb, thawing out of this crazy winter." (Paper Products)
  • "Dealing with ongoing delivery issues associated with congestion at the U.S. West Coast and Vancouver ports." (Machinery)

- Bob Vavra is content manager, Plant Engineeringbvavra@cfemedia.com 



The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
Pipe fabrication and IIoT; 2017 Product of the Year finalists
The future of electrical safety; Four keys to RPM success; Picking the right weld fume option
A new approach to the Skills Gap; Community colleges may hold the key for manufacturing; 2017 Engineering Leaders Under 40
Control room technology innovation; Practical approaches to corrosion protection; Pipeline regulator revises quality programs
The cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Power system design for high-performance buildings; mitigating arc flash hazards
VFDs improving motion control applications; Powering automation and IIoT wirelessly; Connecting the dots
Natural gas engines; New applications for fuel cells; Large engines become more efficient; Extending boiler life

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
This digital report explains how plant engineers and subject matter experts (SME) need support for time series data and its many challenges.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me