PMI hits highest level in 14 years

By Bob Vavra, CFE Media September 17, 2018

The barometer of manufacturing strength remains the monthly PMI Index, and the forecast remains mostly sunny, with a few headwinds.

The PMI jumped 3.2 percentage points to 61.3% the second time in three months the index had been above the 20% growth rate of 60%, according to the Institute for Supply Management, which publishes the monthly manufacturing benchmark.

Despite concerns from committee members about tariffs, employment and the strength of the manufacturing supply chain, Timothy R. Fiore, chairman of ISM’s Manufacturing Business Survey Committee, said the fundamental numbers for manufacturing remained bullish. "Demand remains strong, with the New Orders Index at 60% or above for the 16th straight month, and the Customers’ Inventories Index remaining low," Fiore said in a press release. "The Backlog of Orders Index continued to expand, at higher levels compared to the previous month. Consumption improved, with production and employment continuing to expand, at higher levels compared to July, despite shortages in labor and materials.

"The Index it its highest level since reaching 61.4% in May 2004, but Fiore said committee members remains cautious about the impact of trade issues and other challenges. "Demand is still robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations," Fiore said.

"Panelists are actively evaluating how to respond to these business changes, given the uncertainty."

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