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PMI® at 58.7%; October Manufacturing ISM® Report On Business®New Orders, Production, Backlog of Orders and Employment Continue Growing; Supplier Deliveries Slowing at Slower Rate; Raw Materials Inventories Contracting, Customers' Inventories Too Low; Prices Increasing at Slower Rate TEMPE, Ariz., Nov. 1, 2017 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in October, and the overall economy grew for the 101st consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The October PMI® registered 58.7 percent, a decrease of 2.1 percentage points from the September reading of 60.8 percent. The New Orders Index registered 63.4 percent, a decrease of 1.2 percentage points from the September reading of 64.6 percent. The Production Index registered 61 percent, a 1.2 percentage point decrease compared to the September reading of 62.2 percent. The Employment Index registered 59.8 percent, a decrease of 0.5 percentage point from the September reading of 60.3 percent. The Supplier Deliveries Index registered 61.4 percent, a 3 percentage point decrease from the September reading of 64.4 percent. The Inventories Index registered 48 percent, a decrease of 4.5 percentage points from the September reading of 52.5 percent. The Prices Index registered 68.5 percent in October, a 3 percentage point decrease from the September level of 71.5, indicating higher raw materials prices for the 20th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all continuing to grow in October, supplier deliveries continuing to slow (improving) and inventories contracting during the period. Prices continue to remain under pressure. The Customers' Inventories Index remains at low levels." Of the 18 manufacturing industries, 16 reported growth in October, in the following order: Paper Products; Nonmetallic Mineral Products; Machinery; Transportation Equipment; Wood Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Textile Mills; Chemical Products; Computer & Electronic Products; Fabricated Metal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Primary Metals. Two industries reported the same level of activity as September. WHAT RESPONDENTS ARE SAYING …
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes. COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply *Indicates both up and down in price. OCTOBER 2017 MANUFACTURING INDEX SUMMARIES PMI® A PMI® above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the October PMI® indicates growth for the 101st consecutive month in the overall economy and the 14th straight month of growth in the manufacturing sector. Fiore says, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through October (57.3 percent) corresponds to a 4.4 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for October (58.7 percent) is annualized, it corresponds to a 4.9 percent increase in real GDP annually." THE LAST 12 MONTHS
New Orders Twelve of 18 industries reported growth in new orders in October, listed in the following order: Paper Products; Apparel, Leather & Allied Products; Wood Products; Machinery; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; Petroleum & Coal Products; and Primary Metals. Three industries — Printing & Related Support Activities; Plastics & Rubber Products; and Fabricated Metal Products — reported a decrease in new orders in October compared to September.
Production The 15 industries reporting growth in production during the month of October — listed in order — are: Paper Products; Apparel, Leather & Allied Products; Wood Products; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Chemical Products; Machinery; Petroleum & Coal Products; Plastics & Rubber Products; Computer & Electronic Products; and Fabricated Metal Products. One industry — Primary Metals — reported a decrease in production in October compared to September.
Employment Of the 18 manufacturing industries, the 15 reporting employment growth in October — listed in order — are: Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; Paper Products; Food, Beverage & Tobacco Products; Machinery; Petroleum & Coal Products; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Primary Metals; Chemical Products; Computer & Electronic Products; and Miscellaneous Manufacturing. The only industry reporting a decrease in employment in October is Apparel, Leather & Allied Products.
Supplier Deliveries The 12 industries reporting slower supplier deliveries in October — listed in order — are: Plastics & Rubber Products; Machinery; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; Chemical Products; and Primary Metals. Two industries — Furniture & Related Products; and Miscellaneous Manufacturing — reported faster deliveries in October compared to September.
Inventories* The six industries reporting higher inventories in October — listed in order — are: Nonmetallic Mineral Products; Machinery; Furniture & Related Products; Transportation Equipment; Miscellaneous Manufacturing; and Primary Metals. The 11 industries reporting lower inventories in October — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Chemical Products; Paper Products; Plastics & Rubber Products; Fabricated Metal Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products.
Customers' Inventories* Two manufacturing industries — Furniture & Related Products; and Fabricated Metal Products — reported customers' inventories as being too high during the month of October. The nine industries reporting customers' inventories as too low during October — listed in order — are: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Paper Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Machinery. Six industries reported no change in customer inventories in October compared to September.
Prices* Fourteen industries reported paying increased prices for raw materials in October, in the following order: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; Computer & Electronic Products; Furniture & Related Products; and Primary Metals. One industry, Fabricated Metal Products, reported prices as decreasing during the period.
Backlog of Orders* The nine industries reporting growth in order backlogs in October — listed in order — are: Textile Mills; Paper Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; and Transportation Equipment. The four industries reporting a decrease in order backlogs during October are: Primary Metals; Printing & Related Support Activities; Computer & Electronic Products; and Fabricated Metal Products.
New Export Orders* The eight industries reporting growth in new export orders in October — listed in order — are: Paper Products; Machinery; Transportation Equipment; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; and Miscellaneous Manufacturing. Three industries — Electrical Equipment, Appliances & Components; Plastics & Rubber Products; and Fabricated Metal Products — reported a decrease in new export orders. Seven industries reported no change in export orders in October compared to September.
Imports* The 11 industries reporting growth in imports during the month of October — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; and Miscellaneous Manufacturing. Four industries — Nonmetallic Mineral Products; Primary Metals; Chemical Products; and Fabricated Metal Products — reported a decrease in imports during October compared to September.
*The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments. Buying Policy
About This Report The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 43.3 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.3 percent, it is generally declining. The distance from 50 percent or 43.3 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis. The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month. The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease. 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