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Manufacturing PMI® at 50.2%; October 2022 Manufacturing ISM® Report On Business®New Orders Contracting; Production Growing; Backlogs Contracting; Supplier Deliveries Faster; Raw Materials Inventories Growing; Customers' Inventories Too Low; Prices Decreasing; Exports Contracting; Imports Growing TEMPE, Ariz., Nov. 1, 2022 /PRNewswire/ -- Economic activity in the manufacturing sector grew in October, with the overall economy achieving a 29th 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 October Manufacturing PMI® registered 50.2 percent, 0.7 percentage point lower than the 50.9 percent recorded in September. This figure indicates expansion in the overall economy for the 29th month in a row after contraction in April and May 2020. The Manufacturing PMI® figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders Index remained in contraction territory at 49.2 percent, 2.1 percentage points higher than the 47.1 percent recorded in September. The Production Index reading of 52.3 percent is a 1.7-percentage point increase compared to September's figure of 50.6 percent. The Prices Index registered 46.6 percent, down 5.1 percentage points compared to the September figure of 51.7 percent. This is the index's lowest reading since May 2020 (40.8 percent). The Backlog of Orders Index registered 45.3 percent, 5.6 percentage points lower than the September reading of 50.9 percent. After one month of contraction, the Employment Index was unchanged at 50 percent, 1.3 percentage points higher than the 48.7 percent recorded in September. The Supplier Deliveries Index reading of 46.8 percent is 5.6 percentage points lower than the September figure of 52.4 percent. This reading, the index's lowest since March 2009 (43.2 percent), ended a streak of 79 months in 'slowing' territory. The Inventories Index registered 52.5 percent, 3 percentage points lower than the September reading of 55.5 percent. The New Export Orders Index reading of 46.5 percent is down 1.3 percentage points compared to September's figure of 47.8 percent. This is the index's lowest figure since May 2020, when it registered 39.5 percent. The Imports Index remained in expansion territory at 50.8 percent, 1.8 percentage points below the September reading of 52.6 percent." Fiore continues, "The U.S. manufacturing sector continues to expand, but at the lowest rate since the coronavirus pandemic recovery began. With panelists reporting softening new order rates over the previous five months, the October index reading reflects companies' preparing for potential future lower demand. In the meantime, demand eased, with the (1) New Orders Index remaining in contraction territory, (2) New Export Orders Index below 50 percent for a third consecutive month and at a faster rate of contraction, (3) Customers' Inventories Index remaining at a low level, with the same reading as in September and (4) Backlog of Orders Index slipping into contraction. Output/Consumption (measured by the Production and Employment indexes) improved month over month, with a combined positive 3-percentage point impact on the Manufacturing PMI® calculation. The Employment Index shifted from contraction to a reading of 50 percent (unchanged), and the Production Index increased by 1.7 percentage points, staying in modest growth territory. Business Survey Committee panelists' companies are continuing to manage head counts through hiring freezes and attrition to lower levels, with medium- and long-term demand still uncertain. Inputs — defined as supplier deliveries, inventories, prices and imports — mostly accommodated growth. The Supplier Deliveries Index indicated faster deliveries and the Inventories Index dropped 3 percentage points as panelists' companies continued to manage the total supply chain inventory. The Prices Index decreased for a seventh straight month and fell into contraction territory, which should encourage buyers. "Of the six biggest manufacturing industries, three — Machinery; Petroleum & Coal Products; and Transportation Equipment — registered moderate-to-strong growth in October. "Manufacturing expanded for the 29th straight month in October. Panelists' companies continue to carefully manage hiring, month-over-month supplier delivery performance was the best since March 2009, and the Prices Index indicated decreasing prices for the first time since May 2020. Like in September, mentions of large-scale layoffs were absent from panelists' comments, indicating companies are confident of near-term demand. As a result, managing medium-term head counts and supply chain inventories remain primary goals. With the decline in the Backlog of Orders Index, buyers and sellers will begin to shore up order books and order streams to reduce share loss in the medium-to-long term," says Fiore. Eight manufacturing industries reported growth in October, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Machinery; Petroleum & Coal Products; Transportation Equipment; Miscellaneous Manufacturing; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components. The 10 industries reporting contraction in October compared to September, in the following order are: Furniture & Related Products; Wood Products; Paper Products; Textile Mills; Printing & Related Support Activities; Fabricated Metal Products; Chemical Products; Primary Metals; Computer & Electronic Products; and Food, Beverage & Tobacco Products. WHAT RESPONDENTS ARE SAYING
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. *Number of months moving in current direction. 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. OCTOBER 2022 MANUFACTURING INDEX SUMMARIES Manufacturing PMI® A Manufacturing PMI® above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the October Manufacturing PMI® indicates the overall economy grew in October for the 29th consecutive month following contraction in April and May 2020. "The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for October (50.2 percent) corresponds to a 0.5-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, three reported growth in new orders in October: Apparel, Leather & Allied Products; Petroleum & Coal Products; and Plastics & Rubber Products. Twelve industries reported a decline in new orders in October, in the following order: Wood Products; Furniture & Related Products; Printing & Related Support Activities; Paper Products; Textile Mills; Fabricated Metal Products; Primary Metals; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Miscellaneous Manufacturing.
Production The six industries reporting growth in production during the month of October — listed in order — are: Plastics & Rubber Products; Computer & Electronic Products; Transportation Equipment; Primary Metals; Machinery; and Fabricated Metal Products. The eight industries reporting a decrease in production in October — in the following order — are: Textile Mills; Furniture & Related Products; Wood Products; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Chemical Products.
Employment Of 18 manufacturing industries, nine reported employment growth in October, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Machinery; Plastics & Rubber Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Chemical Products. The five industries reporting a decrease in employment in October are: Furniture & Related Products; Primary Metals; Computer & Electronic Products; Fabricated Metal Products; and Transportation Equipment.
Supplier Deliveries† Four of 18 manufacturing industries reported slower supplier deliveries in October: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Textile Mills; and Transportation Equipment. The nine industries reporting faster supplier deliveries in October as compared to September — in the following order — are: Furniture & Related Products; Plastics & Rubber Products; Computer & Electronic Products; Wood Products; Electrical Equipment, Appliances & Components; Chemical Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Machinery.
Inventories Of 18 manufacturing industries, the nine reporting higher inventories in October — in the following order — are: Machinery; Primary Metals; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Transportation Equipment; and Food, Beverage & Tobacco Products. The five industries reporting contracting inventories in October are: Wood Products; Paper Products; Plastics & Rubber Products; Chemical Products; and Fabricated Metal Products.
Customers' Inventories† Four industries (Paper Products; Wood Products; Electrical Equipment, Appliances & Components; and Primary Metals) reported customers' inventories as too high in October. The nine industries reporting customers' inventories as too low in October — listed in order — are: Food, Beverage & Tobacco Products; Petroleum & Coal Products; Machinery; Computer & Electronic Products; Chemical Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; and Miscellaneous Manufacturing.
Prices† In October, five of 18 industries reported paying increased prices for raw materials: Paper Products; Food, Beverage & Tobacco Products; Primary Metals; Miscellaneous Manufacturing; and Computer & Electronic Products. The 10 industries reporting paying decreased prices for raw materials in October — in the following order — are: Wood Products; Apparel, Leather & Allied Products; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Chemical Products; Transportation Equipment; and Machinery.
Backlog of Orders† Three industries reported growth in order backlogs in October: Apparel, Leather & Allied Products; Petroleum & Coal Products; and Food, Beverage & Tobacco Products. Twelve industries reported lower backlogs in October, in the following order: Textile Mills; Furniture & Related Products; Wood Products; Paper Products; Nonmetallic Mineral Products; Chemical Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; Primary Metals; Miscellaneous Manufacturing; and Transportation Equipment.
New Export Orders† Three industries reported growth in new export orders in October: Miscellaneous Manufacturing; Plastics & Rubber Products; and Food, Beverage & Tobacco Products. The 10 industries reporting a decrease in new export orders in October — in the following order — are: Wood Products; Textile Mills; Furniture & Related Products; Primary Metals; Paper Products; Fabricated Metal Products; Machinery; Chemical Products; Computer & Electronic Products; and Transportation Equipment.
Imports† The seven industries reporting growth in imports in October — in the following order — are: Primary Metals; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Food, Beverage & Tobacco Products; Plastics & Rubber Products; and Machinery. Five industries reported lower volumes of imports in October: Paper Products; Wood Products; Furniture & Related Products; Fabricated Metal Products; and Chemical Products. Six industries reported no change in imports in October.
†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 48.7 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.7 percent, it is generally declining. The distance from 50 percent or 48.7 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® 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 November 2022 data will be released at 10:00 a.m. ET on Thursday, December 1, 2022. *Unless the New York Stock Exchange is closed.
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