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PMI® at 58.7; May Manufacturing ISM® Report On Business®New Orders, Production, and Employment Growing Supplier Deliveries Slowing at Faster Rate; Backlog Growing Raw Materials Inventories Growing; Customers' Inventories Too Low Prices Increasing at Faster Rate; Exports and Imports Growing TEMPE, Ariz., June 1, 2018 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in May, and the overall economy grew for the 109th 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 May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent. The New Orders Index registered 63.7 percent, an increase of 2.5 percentage points from the April reading of 61.2 percent. The Production Index registered 61.5 percent, a 4.3 percentage point increase compared to the April reading of 57.2 percent. The Employment Index registered 56.3 percent, an increase of 2.1 percentage points from the April reading of 54.2 percent. The Supplier Deliveries Index registered 62 percent, a 0.9 percentage point increase from the April reading of 61.1 percent. The Inventories Index registered 50.2 percent, a decrease of 2.7 percentage points from the April reading of 52.9 percent. The Prices Index registered 79.5 percent in May, a 0.2 percentage point increase from the April reading of 79.3 percent, indicating higher raw materials prices for the 27th consecutive month. "Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60 or above for the 13th straight month, and the Customers' Inventories Index remaining at very low levels. The Backlog of Orders Index continued expanding, with its highest reading since April 2004, when it registered 66.5 percent. Consumption, described as production and employment, continues to expand in spite of labor and skill shortages. Inputs, expressed as supplier deliveries, inventories and imports, had expansion declines, due primarily to inventory reductions likely caused by supplier performance issues. Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders expanded at slower rates. The Prices Index is at its highest level since April 2011, when it registered 82.6 percent. Demand remains robust, but the nation's employment resources and supply chains continue to struggle. Respondents say price pressure at their companies is causing price-increase discussions as we prepare to enter H2." Of the 18 manufacturing industries, 16 reported growth in May, in the following order: Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Fabricated Metal Products; Furniture & Related Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Paper Products; and Primary Metals. No industry reported a decrease in PMI® in May compared to April. 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 The number of consecutive months the commodity is listed is indicated after each item. MAY 2018 MANUFACTURING INDEX SUMMARIES PMI® A PMI® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the May PMI® indicates growth for the 109th consecutive month in the overall economy and the 21st straight month of growth in the manufacturing sector. "The past relationship between the PMI® and the overall economy indicates that the PMI® for May (58.7 percent) corresponds to a 4.8-percent increase in real gross domestic product (GDP) on an annualized basis." THE LAST 12 MONTHS
New Orders Fifteen of 18 industries reported growth in new orders in May, listed in the following order: Nonmetallic Mineral Products; Computer & Electronic Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Miscellaneous Manufacturing; Textile Mills; Printing & Related Support Activities; Chemical Products; Machinery; Transportation Equipment; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Plastics & Rubber Products; and Primary Metals. The only industry reporting a decrease in new orders in May compared to April is Apparel, Leather & Allied Products.
Production The 15 industries reporting growth in production during the month of May — listed in order — are: Textile Mills; Furniture & Related Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; Printing & Related Support Activities; Machinery; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Transportation Equipment; and Paper Products. The only industry reporting a decrease in production in May compared to April is Apparel, Leather & Allied Products.
Employment Of the 18 manufacturing industries, the 13 reporting employment growth in May — listed in order — are: Textile Mills; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Furniture & Related Products; Miscellaneous Manufacturing; Fabricated Metal Products; Plastics & Rubber Products; Transportation Equipment; Computer & Electronic Products; Machinery; and Paper Products. The three industries reporting a decrease in employment in May compared to April are: Apparel, Leather & Allied Products; Printing & Related Support Activities; and Nonmetallic Mineral Products.
Supplier Deliveries The 17 industries reporting slower supplier deliveries in May — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Fabricated Metal Products; Machinery; Petroleum & Coal Products; Plastics & Rubber Products; Textile Mills; Electrical Equipment, Appliances & Components; Paper Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Furniture & Related Products; Primary Metals; Transportation Equipment; Chemical Products; and Miscellaneous Manufacturing. No industries reported faster supplier deliveries in May compared to April.
Inventories* The eight industries reporting higher inventories in May — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Chemical Products; and Machinery. The six industries reporting lower inventories in May — listed in order — are: Plastics & Rubber Products; Petroleum & Coal Products; Paper Products; Miscellaneous Manufacturing; Transportation Equipment; and Computer & Electronic Products.
Customers' Inventories* The only manufacturing industry reporting customers' inventories as too high during the month of May is Miscellaneous Manufacturing. The 10 industries reporting customers' inventories as too low during May — listed in order — are: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Chemical Products; Paper Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; and Primary Metals.
Prices* Seventeen industries reported paying increased prices for raw materials in May, in the following order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Petroleum & Coal Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Primary Metals; Machinery; Computer & Electronic Products; Paper Products; Textile Mills; Transportation Equipment; Furniture & Related Products; Chemical Products; and Plastics & Rubber Products. No industry reported a decrease in prices in May compared to April.
Backlog of Orders* The 13 industries reporting growth in order backlogs in May — listed in order — are: Printing & Related Support Activities; Paper Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Machinery; Furniture & Related Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The only industry reporting a decrease in order backlogs during May is Apparel, Leather & Allied Products.
New Export Orders* The eight industries reporting growth in new export orders in May — listed in order — are: Nonmetallic Mineral Products; Furniture & Related Products; Chemical Products; Computer & Electronic Products; Transportation Equipment; Machinery; Plastics & Rubber Products; and Fabricated Metal Products. Two industries — Apparel, Leather & Allied Products; and Primary Metals — reported a decrease in new export orders in May as compared to April. Eight industries reported no change in raw materials inventories in April compared to March.
Imports* The six industries reporting growth in imports during the month of May — listed in order — are: Furniture & Related Products; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; Transportation Equipment; and Machinery. The three industries that reported a decrease in imports during May compared to April are: Petroleum & Coal Products; Paper Products; and Plastics & Rubber Products. Eight industries reported no change in imports in May compared to April.
*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 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 percent is indicative of the extent 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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