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Manufacturing PMI® at 58.7%; January 2021 Manufacturing ISM® Report On Business®New Orders, Production & Employment Growing; Supplier Deliveries Slowing at Faster Rate; Backlog Growing; Raw Materials Inventories Growing; Customers' Inventories Too Low; Prices Increasing; Exports and Imports Growing This report reflects the recently completed annual adjustments to the seasonal factors used to calculate the indexes. TEMPE, Ariz., Feb. 1, 2021 /PRNewswire/ -- Economic activity in the manufacturing sector grew in January, with the overall economy notching an eighth consecutive month of growth, 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 January Manufacturing PMI® registered 58.7 percent, down 1.8 percentage points from the seasonally adjusted December reading of 60.5 percent. This figure indicates expansion in the overall economy for the eighth month in a row after contraction in March, April, and May. The New Orders Index registered 61.1 percent, down 6.4 percentage points from the seasonally adjusted December reading of 67.5 percent. The Production Index registered 60.7 percent, a decrease of 4 percentage points compared to the seasonally adjusted December reading of 64.7 percent. The Backlog of Orders Index registered 59.7 percent, 0.6 percentage point above the December reading of 59.1 percent. The Employment Index registered 52.6 percent, 0.9 percentage point higher from the seasonally adjusted December reading of 51.7 percent. The Supplier Deliveries Index registered 68.2 percent, up 0.5 percentage point from the December figure of 67.7 percent. The Inventories Index registered 50.8 percent, 0.2 percentage point lower than the seasonally adjusted December reading of 51 percent. The Prices Index registered 82.1 percent, up 4.5 percentage points compared to the December reading of 77.6 percent. The New Export Orders Index registered 54.9 percent, a decrease of 2.6 percentage points compared to the December reading of 57.5 percent. The Imports Index registered 56.8 percent, a 2.2-percentage point increase from the December reading of 54.6 percent." Fiore continues, "The manufacturing economy continued its recovery in January. Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential. However, panel sentiment remains optimistic (three positive comments for every cautious comment), similar to December levels. Demand expanded, with the (1) New Orders Index growing at a strong level, supported by the New Export Orders Index expanding, (2) Customers' Inventories Index remaining in 'too low' territory and at a level considered a positive for future production, and the (3) Backlog of Orders Index remaining at high levels. Consumption (measured by the Production and Employment indexes) contributed negatively (a combined 3.1-percentage point decrease) to the Manufacturing PMI® calculation. Five of the top six industries reported moderate to strong expansion. The Employment Index expanded for a second straight month, but panelists continue to note difficulties in attracting and retaining labor at their companies and supplier facilities. Inputs — expressed as supplier deliveries, inventories and imports — continued to indicate input-driven constraints to production expansion, at higher rates compared to December, as indicated by minimal gains in inventory levels and declining supplier performance. Imports expanded in the period, despite port backlogs, but not at levels desired by panelists. Supplier delivery struggles continued, contributing moderately to the Manufacturing PMI® calculation. (The Supplier Deliveries and Inventories indexes directly factor into the Manufacturing PMI®; the Imports Index does not.) The Prices Index surged dramatically in January, hitting a level last reached in April 2011, indicating continued supplier pricing power. "Of the six biggest manufacturing industries, five — Chemical Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products — registered moderate to strong growth in January. Petroleum & Coal Products contracted. "Manufacturing performed well for the eighth straight month, with demand, consumption and inputs registering strong growth compared to December. Labor market difficulties at panelists' companies and their suppliers will continue to restrict the manufacturing economy expansion until the coronavirus (COVID-19) crisis abates," says Fiore. Of the 18 manufacturing industries, 16 reported growth in January, in the following order: Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Chemical Products; Fabricated Metal Products; Plastics & Rubber Products; Transportation Equipment; Apparel, Leather & Allied Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Textile Mills; and Computer & Electronic Products. The two industries reporting contraction in January are: Printing & Related Support Activities; and Petroleum & Coal Products. 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. JANUARY 2021 MANUFACTURING INDEX SUMMARIES Manufacturing PMI® A Manufacturing PMI® above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January Manufacturing PMI® indicates the overall economy grew in January for the eighth consecutive month following contractions in March, April, and May. "The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for December (58.7 percent) corresponds to a 4.4-percent increase in real gross domestic product (GDP) on an annualized basis," says Fiore. THE LAST 12 MONTHS
New Orders Of the 18 manufacturing industries, the 13 that reported growth in new orders in January — in the following order — are: Primary Metals; Electrical Equipment, Appliances & Components; Machinery; Plastics & Rubber Products; Transportation Equipment; Wood Products; Paper Products; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Furniture & Related Products; and Computer & Electronic Products. The two industries reporting a decline in new orders in January are: Printing & Related Support Activities; and Textile Mills.
Production The 12 industries reporting growth in production during the month of January — listed in order — are: Machinery; Primary Metals; Wood Products; Electrical Equipment, Appliances & Components; Chemical Products; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Paper Products; and Computer & Electronic Products. The two industries reporting decreased production in January are: Printing & Related Support Activities; and Textile Mills.
Employment Of the 18 manufacturing industries, the six industries to report employment growth in January — in the following order — are: Electrical Equipment, Appliances & Components; Wood Products; Primary Metals; Machinery; Nonmetallic Mineral Products; and Chemical Products. The seven industries reporting a decrease in employment in January — listed in the following order — are: Printing & Related Support Activities; Paper Products; Textile Mills; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.
Supplier Deliveries† Seventeen industries reported slower supplier deliveries in January, listed in the following order: Apparel, Leather & Allied Products; Paper Products; Textile Mills; Nonmetallic Mineral Products; Fabricated Metal Products; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Furniture & Related Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Miscellaneous Manufacturing; Petroleum & Coal Products; and Primary Metals. No industries reported faster supplier deliveries in January.
*Supplier Deliveries is no longer seasonally adjusted; however, due to more precise rounding, this number increased by 0.1 percentage point. Inventories The seven industries reporting higher inventories in January — listed in order — are: Textile Mills; Furniture & Related Products; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; and Transportation Equipment. The four industries reporting a decrease in inventories in January are: Petroleum & Coal Products; Computer & Electronic Products; Miscellaneous Manufacturing; and Fabricated Metal Products. Seven industries reported no change in January compared to December.
Customers' Inventories† Of the 18 industries, the only one reporting higher customers' inventories in January is Printing & Related Support Activities. The 14 industries reporting customers' inventories as too low during January — listed in order — are: Wood Products; Nonmetallic Mineral Products; Primary Metals; Machinery; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.
Prices† All 18 industries reported paying increased prices for raw materials in January, in the following order: Apparel, Leather & Allied Products; Paper Products; Wood Products; Fabricated Metal Products; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Electrical Equipment, Appliances & Components; Machinery; Textile Mills; Nonmetallic Mineral Products; Chemical Products; Petroleum & Coal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Transportation Equipment; Food, Beverage & Tobacco Products; and Printing & Related Support Activities.
Backlog of Orders† The 12 industries reporting growth in order backlogs in January, in the following order, are: Transportation Equipment; Primary Metals; Wood Products; Paper Products; Electrical Equipment, Appliances & Components; Machinery; Fabricated Metal Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; and Plastics & Rubber Products. In January, two industries reported lower backlogs: Textile Mills; and Furniture & Related Products.
New Export Orders† The 10 industries reporting growth in new export orders in January — in the following order — are: Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Machinery; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The only industry reporting a decrease in new export orders is Paper Products. Seven industries reported no change in exports in January.
Imports† The 11 industries reporting growth in imports in January — in the following order — are: Wood Products; Primary Metals; Textile Mills; Machinery; Transportation Equipment; Nonmetallic Mineral Products; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. Two industries reported a decrease in imports in January: Printing & Related Support Activities; and Paper 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 (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 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 42.8 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.8 percent, it is generally declining. The distance from 50 percent or 42.8 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 since there is no significant seasonal pattern. 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® 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 next Manufacturing ISM® Report On Business® featuring February 2021 data will be released at 10:00 a.m. ET on Monday, March 1, 2021. *Unless the New York Stock Exchange is closed.
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