PMI decline shows manufacturing in a slump

The Institute for Supply Management's Purchasing Managers' Index (PMI) stayed in contraction and showed an overall decline for the seventh straight month due to global concerns.

01/04/2016


Index stayed in contraction, slides for seventh straight month over global concerns. CFE Media file photo.

Manufacturing officially is in a slump.

The Institute for Supply Management's (ISM) monthly Purchasing Managers' Index (PMI) stayed below the 50% contraction level in December, sliding 0.4 percentage points to 48.2% It was the second straight month of contraction for the PMI, and the seventh consecutive month of decline for the benchmark manufacturing index. It's also the lowest reading for the PMI since a 45.9% reading in June 2009. 

The fall in December was not unexpected. There were reports of a continuing decline in the Chinese manufacturing market, which led to a Jan. 4 selloff in stock markets in China and the United States. The Dow Jones Industrial Average fell 350 points at the open of the first trading session of 2016. Perhaps more troubling to the manufacturing sector is some issues cited by ISM's Business Survey Committee show no sign of going away soon.

"As was the case in November, 10 out of 18 manufacturing industries reported contraction in December," said Bradley Holcomb, chairman of the ISM Business Supply Committee. "Contraction in new orders, production, employment and raw materials inventories accounted for the overall softness in December."

A weakening in oil prices has different impacts on different sectors. A committee member in the petroleum and coal products industry said, "Low oil prices are negatively impacting oil and gas exploration activities. Low oil prices are generally positive for the petrochemical industry."

Index stayed in contraction, slides for seventh straight month over global concerns. CFE Media file photo.

However, a committee member in the rubber and plastics industry noted, "Business is going well. Low fuel prices keep full size SUV and truck sales at high volumes." Some committee members noted there were annual slowdowns expected in December, due to employment furloughs and tighter year-end budgets. But a committee member in the computer and electronics sector, a market usually bolstered by the Christmas season, noted, "December revenue is flat compared to last month."

Since hitting 53.5% in June 2015, the PMI has been on a long, slow decline, finally falling below the 50% threshold for manufacturing expansion in November for the first time in three years.



Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
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.
July/Aug
GAMS preview, 2018 Mid-Year Report, EAM and Safety
June 2018
2018 Lubrication Guide, Motor and maintenance management, Control system migration
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
August 2018
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
August 2018
Choosing an automation controller, Lean manufacturing
February 2018
Setting internal automation standards

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
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 Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me