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Manufacturing PMI® at 47.8%; February 2024 Manufacturing ISM® Report On Business®New Orders; Backlogs Contracting; Production; Employment Contracting; Supplier Deliveries Slowing; Raw Materials Inventories Contracting; Customers' Inventories Too Low; Prices Increasing; Exports and Imports Growing TEMPE, Ariz., March 1, 2024 /PRNewswire/ -- Economic activity in the manufacturing sector contracted in February for the 16th consecutive month following one month of "unchanged" status (a PMI® reading of 50 percent) and 28 months of growth prior to that, 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 Manufacturing PMI® registered 47.8 percent in February, down 1.3 percentage points from the 49.1 percent recorded in January. The overall economy continued in expansion for the 46th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index moved back into contraction territory at 49.2 percent, 3.3 percentage points lower than the 52.5 percent recorded in January. The February reading of the Production Index (48.4 percent) is 2 percentage points lower than January's figure of 50.4 percent. The Prices Index registered 52.5 percent, down 0.4 percentage point compared to the reading of 52.9 percent in January. The Backlog of Orders Index registered 46.3 percent, 1.6 percentage points higher than the 44.7 percent recorded in January. The Employment Index registered 45.9 percent, down 1.2 percentage points from January's figure of 47.1 percent. "The Supplier Deliveries Index figure of 50.1 percent is 1 percentage point higher than the 49.1 percent recorded in January. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index decreased 0.9 percentage point to 45.3 percent from January's reading of 46.2 percent. "The New Export Orders Index reading of 51.6 percent is 6.4 percentage points higher than January's figure of 45.2 percent. The Imports Index continued in expansion territory, registering 53 percent, 2.9 percentage points higher than the 50.1 percent reported in January. Both indexes reported their highest readings since July 2022, when the New Export Orders Index registered 52.6 percent and the Imports Index 54.4 percent." Fiore continues, "The U.S. manufacturing sector continued to contract (and at a faster rate compared to January), with demand slowing, output easing and inputs remaining accommodative. Demand moderated, with the (1) New Orders Index back in contraction as seasonal headwinds were too strong to overcome, (2) New Export Orders Index returned to expansion and (3) Backlog of Orders Index improving but still in moderate contraction territory. The Customers' Inventories Index contracted for the third consecutive month, remaining accommodative for future production. Output (measured by the Production and Employment indexes) dropped, with a combined 3.2-percentage point downward impact on the Manufacturing PMI® calculation. Panelists' companies maintained their production levels month over month, but that growth could not outpace seasonal factors. Head-count reductions continued in February, with notable layoff activity noted. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth but again showed signs of stiffening. The Supplier Deliveries Index improved again, moving into 'slower' territory, and the Inventories Index slid back due to inability for growth consistent with seasonal factors, remaining in moderate contraction territory. The Prices Index remained in moderate expansion (or 'increasing') territory as commodity driven costs continue to oscillate. "Of the six biggest manufacturing industries, three (Fabricated Metal Products; Chemical Products; and Transportation Equipment) registered growth in February. The first two are "foundational" industries, meaning those that provide products and components for other manufacturing industries. "Demand is at the early stages of recovery, and production execution is relatively stable compared to January, as panelists' companies begin to prepare for expansion. Suppliers continue to have capacity but are showing signs of struggling, due in part to their raw material supply chains. Forty percent of manufacturing gross domestic product (GDP) contracted in February, down from 62 percent in January. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 1 percent in February, compared to 27 percent in January and 48 percent in December. Among the top six industries by contribution to manufacturing GDP in February, none had a PMI® at or below 45 percent, compared to two in the previous month," says Fiore. The eight manufacturing industries reporting growth in February — in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Miscellaneous Manufacturing; and Transportation Equipment. The seven industries reporting contraction in February — in the following order — are: Furniture & Related Products; Machinery; Wood Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Paper Products; and Electrical Equipment, Appliances & Components. WHAT RESPONDENTS ARE SAYING
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. FEBRUARY 2024 MANUFACTURING INDEX SUMMARIES Manufacturing PMI® A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February Manufacturing PMI® indicates the overall economy grew for the 46th straight month after one month of contraction (April 2020). "The past relationship between the Manufacturing PMI® and the overall economy indicates that the February reading (47.8 percent) corresponds to a change of plus-1.5 percent in real gross domestic product (GDP) on an annualized basis," says Fiore. THE LAST 12 MONTHS
New Orders The 11 manufacturing industries that reported growth in new orders in February — in the following order — are: Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Wood Products; Fabricated Metal Products; Chemical Products; Primary Metals; Transportation Equipment; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Computer & Electronic Products. The four industries reporting a decline in new orders in February are: Furniture & Related Products; Textile Mills; Food, Beverage & Tobacco Products; and Machinery.
Production The seven industries reporting growth in production during the month of February, in order, are: Paper Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; and Chemical Products. The five industries reporting a decrease in production in February are: Wood Products; Furniture & Related Products; Machinery; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. Six industries reported no change in production in February compared to January.
Employment Of 18 manufacturing industries, four reported employment growth in February: Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Primary Metals; and Transportation Equipment. The 10 industries reporting a decrease in employment in February, in the following order, are: Plastics & Rubber Products; Paper Products; Wood Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Machinery; Fabricated Metal Products; and Chemical Products.
Supplier Deliveries† The four manufacturing industries reporting slower supplier deliveries in February are: Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; and Transportation Equipment. The five industries reporting faster supplier deliveries in February are: Paper Products; Machinery; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Computer & Electronic Products. Nine industries reported no change in delivery performance in February compared to January.
Inventories Of 18 manufacturing industries, six reported higher inventories in February, in the following order: Textile Mills; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Primary Metals; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The seven industries reporting lower inventories in February — in the following order — are: Electrical Equipment, Appliances & Components; Paper Products; Chemical Products; Computer & Electronic Products; Plastics & Rubber Products; Transportation Equipment; and Machinery.
Customers' Inventories† The three industries reporting customers' inventories as too high in February are: Computer & Electronic Products; Food, Beverage & Tobacco Products; and Plastics & Rubber Products. The nine industries reporting customers' inventories as too low in February, in order, are: Paper Products; Wood Products; Chemical Products; Primary Metals; Machinery; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing.
Prices† In February, the 11 industries that reported paying increased prices for raw materials, in order, are: Textile Mills; Printing & Related Support Activities; Plastics & Rubber Products; Miscellaneous Manufacturing; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The four industries reporting paying decreased prices for raw materials in February are: Primary Metals; Petroleum & Coal Products; Machinery; and Fabricated Metal Products.
Backlog of Orders† Of 18 manufacturing industries, the five that reported growth in order backlogs in February are: Plastics & Rubber Products; Paper Products; Primary Metals; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. The eight industries reporting lower backlogs in February — in the following order — are: Textile Mills; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; and Chemical Products.
New Export Orders† The six industries reporting growth in new export orders in February — in the following order — are: Wood Products; Nonmetallic Mineral Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Machinery. The six industries reporting a decrease in new export orders in February — in the following order — are: Textile Mills; Paper Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Chemical Products.
Imports† The nine industries reporting an increase in import volumes in February — listed in the following order — are: Wood Products; Printing & Related Support Activities; Transportation Equipment; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Computer & Electronic Products; and Food, Beverage & Tobacco Products. The five industries that reported lower volumes of imports in February are: Nonmetallic Mineral Products; Furniture & Related Products; Primary Metals; Electrical Equipment, Appliances & Components; and Plastics & Rubber Products.
†The Supplier Deliveries, 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 (Manufacturing PMI®, New Orders, Production, Employment and Inventories) 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 Manufacturing 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, and Inventories (seasonally adjusted). 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 Manufacturing PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A Manufacturing PMI® above 42.5 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.5 percent, it is generally declining. The distance from 50 percent or 42.5 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 report on information for the current month for U.S. operations only. 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 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. Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. 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About Institute for Supply Management® (ISM®) The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the second business day of the month. The next Manufacturing ISM® Report On Business® featuring March 2024 data will be released at 10:00 a.m. ET on Monday, April 1, 2024. *Unless the New York Stock Exchange is closed.
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