October Manufacturing Inst. for Supply Management Report On Business
Manufacturing Expansion
(Tempe, Arizona) — Economic activity in the manufacturing sector grew in October for the fourth consecutive month, while the overall economy grew for the 24th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia- Pacific Corporation. "The manufacturing sector enjoyed its fourth consecutive month of growth as new orders continue to lead the recovery. Production made a sharp swing upward during October, signifying growth for the sixth consecutive month."
ISM's Backlog of Orders Index indicates that order backlogs improved again in October. However, manufacturing Employment continued to decline in October as the index remained below the breakeven point (50 percent) for the 37th consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 20th consecutive month. New Export Orders grew in October for the 22nd consecutive month, while October's Imports Index grew for the 12th consecutive month.
Comments from purchasing and supply managers seem to be lagging the data. The indexes indicate significant improvement, but the purchasing and supply managers' comments do not reflect this trend. It appears that some industries are not yet experiencing the upturn.
ISM's PMI is 57 percent in October, an increase of 3.3 percentage points when compared to 53.7 in September. ISM's New Orders Index rose 3.9 percentage points from 60.4 percent in September to 64.3 percent in October. ISM's Production Index rose 5.3 percentage points from 57.3 percent in September to 62.6 percent in October. The ISM Employment Index is at 47.7 percent for October, an increase of 2 percentage points when compared to the 45.7 percent reported in September.
ISM's Supplier Deliveries Index registered 53.9 percent, 1.5 percentage points higher than September's 52.4 percent. ISM's Inventories Index rose to 44.5 percent in October from the 42.7 percent reported in September. ISM's Customers' Inventories Index for October is at 39 percent, a decrease of 5.5 percentage points compared to the September reading of 44.5 percent. ISM's Prices Index in October is 58.5 percent, 2.5 percentage points higher than the 56 percent reported in September.
ISM's Backlog of Orders Index increased 1 percentage point, registering 53.5 percent in October compared to 52.5 percent in September. ISM's New Export Orders Index registered 59.6 percent, up 6.7 percentage points from September's 52.9 percent, while ISM's Imports Index declined 3.4 percentage points to 57.3 percent in October from 60.7 percent in September.
"This is the best report that we have seen in quite some time in terms of the overall strength of manufacturing. The picture continues to improve, and it appears that manufacturing will finish 2003 on a very positive note, assuming the recent trend continues," said Ore.
Of the 20 industries in the manufacturing sector, 14 industries reported growth: Leather; Instruments & Photographic Equipment; Food; Glass, Stone, & Aggregate; Tobacco; Paper; Fabricated Metals; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; Chemicals; Electronic Components & Equipment; Primary Metals; Furniture; and Transportation & Equipment.
"Plywood is the only commodity reported in short supply. Commodities reported up in price are: Beef; Copper; Crude Oil; Lumber; Natural Gas; Nickel; Plastic Resin; Poly Bags; Polyethylene Film; Stainless Steel; Steel; and Sulfuric Acid. The commodities reported down in price are Caustic Soda; Corrugated; Gasoline and Natural Gas," Ore stated.
PMI
The PMI indicates that the manufacturing economy grew in October for the fourth consecutive month. The PMI for October registered 57 percent, an increase of 3.3 percentage points compared to the September reading of 53.7 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 42.9 percent, over a period of time, generally indicates an expansion of the overall economy. The October PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the average PMI for January through October (51.2 percent) corresponds to a 3 percent increase in real gross domestic product (GDP). However, if the PMI for October (57 percent) turned out to be the annual average for 2003, this would correspond to a 5.2 percent increase in GDP.
New Orders
ISM's New Orders Index grew in October with a reading of 64.3 percent. The index is 3.9 percentage points higher than the 60.4 percent registered in September and is the sixth consecutive month the index has exceeded 50 percent. A New Orders Index above 51 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars). Thirteen industries report increases for the month of October: Leather; Instruments & Photographic Equipment; Rubber & Plastic Products; Glass, Stone, & Aggregate; Food; Paper; Industrial & Commercial Equipment & Computers; Fabricated Metals; Textiles; Electronic Components & Equipment; Miscellaneous, Chemicals; and Transportation & Equipment.
Production
ISM's Production Index is 62.6 percent in October, 5.3 percentage points higher than the 57.3 percent reported in September, reflecting the sixth consecutive month of growth. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the 20 industries reporting in October, 14 registered growth: Tobacco; Leather; Paper; Glass, Stone, & Aggregate; Instruments & Photographic Equipment; Food; Furniture; Primary Metals; Chemicals; Electronic Components & Equipment; Fabricated Metals; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; and Transportation & Equipment.
Employment
ISM's Employment Index remained below 50 percent in October for the 37th consecutive month. The index registered 47.7 percent in October compared to 45.7 percent in September, an increase of 2 percentage points. An Employment Index above 47.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The six industries reporting growth in Employment during October are: Instruments & Photographic Equipment; Fabricated Metals; Food; Transportation & Equipment; Furniture; and Glass, Stone, & Aggregate.
Supplier Deliveries
ISM's Supplier Deliveries Index indicates delivery performance is slower when comparing October to September. October's reading of 53.9 percent is an increase of 1.5 percentage points over September's reading of 52.4 percent. A reading above 50 percent indicates slower deliveries. The 10 industries reporting slower supplier deliveries in October are: Instruments & Photographic Equipment; Primary Metals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Furniture; Food; Paper; Electronic Components & Equipment; Chemicals; and Transportation & Equipment.
Inventories
The rate of liquidation of manufacturers' inventories decelerated slightly in October as the Inventories Index registered 44.5 percent. This compares to 42.7 percent reported in September. The Inventories Index has been under 50 percent for 45 consecutive months. An Inventories Index greater than 42.1 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in constant 1987 dollars). The five industries reporting higher inventories in October are: Leather; Paper; Wood & Wood Products; Food; and Industrial & Commercial Equipment & Computers.
Customers' Inventories
The Customers' Inventories Index is at 39 percent, a decrease of 5.5 percentage points compared to the September reading of 44.5 percent. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 29th consecutive month that the index has registered below 50 percent. The 39 percent reading is the lowest this index has been since beginning to capture it in December 1996 and equal to the May 2002 index of 39 percent. Primary Metals is the only industry reporting excessive customers' inventories during October.
Prices
ISM's Prices Index indicates manufacturers continued to pay higher prices in October. This is the 20th consecutive month the index has registered higher prices. October's index is at 58.5 percent, 2.5 percentage points higher than September's reading of 56 percent. In October, 26 percent of supply executives reported paying higher prices and 9 percent reported paying lower prices, while 65 percent reported that prices were unchanged from the preceding month.
A Prices Index below 46.9 percent, over time, is generally consistent with a decrease in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The 15 industries reporting paying higher prices in October are: Tobacco; Leather; Paper; Rubber & Plastic Products; Fabricated Metals; Primary Metals; Food; Wood & Wood Products; Textiles; Instruments & Photographic Equipment; Chemicals; Furniture; Industrial & Commercial Equipment & Computers; Transportation & Equipment; and Electronic Components & Equipment.
Backlog of Orders
ISM's Backlog of Orders Index (not seasonally adjusted) registered 53.5 percent, indicating manufacturers' backlogs in October were higher when compared to September. Of the 87 percent of respondents who report their backlog of orders, 27 percent reported greater backlogs, 20 percent reported smaller backlogs, and 53 percent reported no change from September. The 11 industries reporting an increase in order backlogs during the month are: Paper; Glass, Stone, & Aggregate; Furniture; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Food; Fabricated Metals; Primary Metals; Rubber & Plastic Products; Transportation & Equipment; and Miscellaneous.
New Export Orders
ISM's New Export Orders Index for October registered 59.6 percent, an increase of 6.7 percentage points when compared to September's index of 52.9 percent. This is the 22nd consecutive month of growth in export orders. The 11 industries reporting growth in new export orders in October are: Paper; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Wood & Wood Products; Fabricated Metals; Electronic Components & Equipment; Furniture; Chemicals; Transportation & Equipment; Miscellaneous*; and Primary Metals.
Imports
Imports of materials by manufacturers grew during October as the Imports Index registered 57.3 percent. The index declined 3.4 percentage points when compared to September's index of 60.7 percent. The 10 industries reporting growth in import activity for October are: Tobacco; Textiles; Furniture; Paper; Electronic Components & Equipment; Fabricated Metals; Industrial & Commercial Equipment & Computers; Instruments & Photographic Equipment; Chemicals; and Rubber & Plastic Products.
Buying Policy
Average commitment leadtime for Capital Expenditures increased 4 days to 103 days. Average leadtime for Production Materials increased 1 day to 46 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies decreased 1 day to 22 days.
In Short Supply
Plywood is the only commodity reported in short supply.
Up in Price
Beef; Copper — 3rd month; Crude Oil; Lumber — 2nd month; Natural Gas* — 15th month; Nickel — 3rd month; Plastic Resin; Poly Bags; Polyethylene Film; Stainless Steel; Steel; and Sulfuric Acid.
Down in Price
Caustic Soda — 3rd month; Corrugated — 8th month; Gasoline; and Natural Gas*— 7th month.
*Reported as both up and down in price.
The data presented herein is obtained from a survey of manufacturing supply managers 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. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
The Manufacturing ISM Report On Business® is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. Membership of the Business Survey Committee is diversified by Standard Industrial Classification (SIC) category, based on each industry's contribution to Gross Domestic Product (GDP). Twenty industries from various U.S. geographical areas are represented on the committee. The 20 manufacturing Standard Industry Classification codes are: Food; Tobacco; Textiles; Apparel; Wood & Wood Products; Furniture; Paper; Printing & Publishing; Chemicals; Petroleum; Rubber & Plastic Products; Leather; Glass, Stone, & Aggregate; Primary Metals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Transportation & Equipment; Instruments & Photographic Equipment; and Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments).
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 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 supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indices for five of the indicators with varying weights: New Orders – 30%; Production – 25%; Employment – 20%; Supplier Deliveries – 15%; and Inventories – 10%.
Diffusion indices 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 that it is generally declining. A PMI over 42.9 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding; below 42.9 percent, it is generally declining. The distance from 50 percent or 42.9 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.
Responses to Buying Policy reflect the percent reporting the current month's leadtime, the approximate weighted number of days ahead for which commitments are made for Production Materials, Capital Expenditures, 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.
The data presented herein is obtained from a survey of manufacturing supply managers 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. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision making.
The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management™. The Institute for Supply Management™, established in 1915, is the world's leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. The report has been issued by the association since 1931, except for a four-year interruption during World War II.
The full text version of the Manufacturing ISM Report On Business® is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).
(Tempe, Arizona) — Economic activity in the manufacturing sector grew in October for the fourth consecutive month, while the overall economy grew for the 24th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia- Pacific Corporation. "The manufacturing sector enjoyed its fourth consecutive month of growth as new orders continue to lead the recovery. Production made a sharp swing upward during October, signifying growth for the sixth consecutive month."
ISM's Backlog of Orders Index indicates that order backlogs improved again in October. However, manufacturing Employment continued to decline in October as the index remained below the breakeven point (50 percent) for the 37th consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 20th consecutive month. New Export Orders grew in October for the 22nd consecutive month, while October's Imports Index grew for the 12th consecutive month.
Comments from purchasing and supply managers seem to be lagging the data. The indexes indicate significant improvement, but the purchasing and supply managers' comments do not reflect this trend. It appears that some industries are not yet experiencing the upturn.
ISM's PMI is 57 percent in October, an increase of 3.3 percentage points when compared to 53.7 in September. ISM's New Orders Index rose 3.9 percentage points from 60.4 percent in September to 64.3 percent in October. ISM's Production Index rose 5.3 percentage points from 57.3 percent in September to 62.6 percent in October. The ISM Employment Index is at 47.7 percent for October, an increase of 2 percentage points when compared to the 45.7 percent reported in September.
ISM's Supplier Deliveries Index registered 53.9 percent, 1.5 percentage points higher than September's 52.4 percent. ISM's Inventories Index rose to 44.5 percent in October from the 42.7 percent reported in September. ISM's Customers' Inventories Index for October is at 39 percent, a decrease of 5.5 percentage points compared to the September reading of 44.5 percent. ISM's Prices Index in October is 58.5 percent, 2.5 percentage points higher than the 56 percent reported in September.
ISM's Backlog of Orders Index increased 1 percentage point, registering 53.5 percent in October compared to 52.5 percent in September. ISM's New Export Orders Index registered 59.6 percent, up 6.7 percentage points from September's 52.9 percent, while ISM's Imports Index declined 3.4 percentage points to 57.3 percent in October from 60.7 percent in September.
"This is the best report that we have seen in quite some time in terms of the overall strength of manufacturing. The picture continues to improve, and it appears that manufacturing will finish 2003 on a very positive note, assuming the recent trend continues," said Ore.
Of the 20 industries in the manufacturing sector, 14 industries reported growth: Leather; Instruments & Photographic Equipment; Food; Glass, Stone, & Aggregate; Tobacco; Paper; Fabricated Metals; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; Chemicals; Electronic Components & Equipment; Primary Metals; Furniture; and Transportation & Equipment.
"Plywood is the only commodity reported in short supply. Commodities reported up in price are: Beef; Copper; Crude Oil; Lumber; Natural Gas; Nickel; Plastic Resin; Poly Bags; Polyethylene Film; Stainless Steel; Steel; and Sulfuric Acid. The commodities reported down in price are Caustic Soda; Corrugated; Gasoline and Natural Gas," Ore stated.
PMI
The PMI indicates that the manufacturing economy grew in October for the fourth consecutive month. The PMI for October registered 57 percent, an increase of 3.3 percentage points compared to the September reading of 53.7 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 42.9 percent, over a period of time, generally indicates an expansion of the overall economy. The October PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the average PMI for January through October (51.2 percent) corresponds to a 3 percent increase in real gross domestic product (GDP). However, if the PMI for October (57 percent) turned out to be the annual average for 2003, this would correspond to a 5.2 percent increase in GDP.
New Orders
ISM's New Orders Index grew in October with a reading of 64.3 percent. The index is 3.9 percentage points higher than the 60.4 percent registered in September and is the sixth consecutive month the index has exceeded 50 percent. A New Orders Index above 51 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars). Thirteen industries report increases for the month of October: Leather; Instruments & Photographic Equipment; Rubber & Plastic Products; Glass, Stone, & Aggregate; Food; Paper; Industrial & Commercial Equipment & Computers; Fabricated Metals; Textiles; Electronic Components & Equipment; Miscellaneous, Chemicals; and Transportation & Equipment.
Production
ISM's Production Index is 62.6 percent in October, 5.3 percentage points higher than the 57.3 percent reported in September, reflecting the sixth consecutive month of growth. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the 20 industries reporting in October, 14 registered growth: Tobacco; Leather; Paper; Glass, Stone, & Aggregate; Instruments & Photographic Equipment; Food; Furniture; Primary Metals; Chemicals; Electronic Components & Equipment; Fabricated Metals; Industrial & Commercial Equipment & Computers; Rubber & Plastic Products; and Transportation & Equipment.
Employment
ISM's Employment Index remained below 50 percent in October for the 37th consecutive month. The index registered 47.7 percent in October compared to 45.7 percent in September, an increase of 2 percentage points. An Employment Index above 47.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The six industries reporting growth in Employment during October are: Instruments & Photographic Equipment; Fabricated Metals; Food; Transportation & Equipment; Furniture; and Glass, Stone, & Aggregate.
Supplier Deliveries
ISM's Supplier Deliveries Index indicates delivery performance is slower when comparing October to September. October's reading of 53.9 percent is an increase of 1.5 percentage points over September's reading of 52.4 percent. A reading above 50 percent indicates slower deliveries. The 10 industries reporting slower supplier deliveries in October are: Instruments & Photographic Equipment; Primary Metals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Furniture; Food; Paper; Electronic Components & Equipment; Chemicals; and Transportation & Equipment.
Inventories
The rate of liquidation of manufacturers' inventories decelerated slightly in October as the Inventories Index registered 44.5 percent. This compares to 42.7 percent reported in September. The Inventories Index has been under 50 percent for 45 consecutive months. An Inventories Index greater than 42.1 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in constant 1987 dollars). The five industries reporting higher inventories in October are: Leather; Paper; Wood & Wood Products; Food; and Industrial & Commercial Equipment & Computers.
Customers' Inventories
The Customers' Inventories Index is at 39 percent, a decrease of 5.5 percentage points compared to the September reading of 44.5 percent. Respondents indicate that their customers do not have sufficient inventories on hand at this time. This is the 29th consecutive month that the index has registered below 50 percent. The 39 percent reading is the lowest this index has been since beginning to capture it in December 1996 and equal to the May 2002 index of 39 percent. Primary Metals is the only industry reporting excessive customers' inventories during October.
Prices
ISM's Prices Index indicates manufacturers continued to pay higher prices in October. This is the 20th consecutive month the index has registered higher prices. October's index is at 58.5 percent, 2.5 percentage points higher than September's reading of 56 percent. In October, 26 percent of supply executives reported paying higher prices and 9 percent reported paying lower prices, while 65 percent reported that prices were unchanged from the preceding month.
A Prices Index below 46.9 percent, over time, is generally consistent with a decrease in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The 15 industries reporting paying higher prices in October are: Tobacco; Leather; Paper; Rubber & Plastic Products; Fabricated Metals; Primary Metals; Food; Wood & Wood Products; Textiles; Instruments & Photographic Equipment; Chemicals; Furniture; Industrial & Commercial Equipment & Computers; Transportation & Equipment; and Electronic Components & Equipment.
Backlog of Orders
ISM's Backlog of Orders Index (not seasonally adjusted) registered 53.5 percent, indicating manufacturers' backlogs in October were higher when compared to September. Of the 87 percent of respondents who report their backlog of orders, 27 percent reported greater backlogs, 20 percent reported smaller backlogs, and 53 percent reported no change from September. The 11 industries reporting an increase in order backlogs during the month are: Paper; Glass, Stone, & Aggregate; Furniture; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Food; Fabricated Metals; Primary Metals; Rubber & Plastic Products; Transportation & Equipment; and Miscellaneous.
New Export Orders
ISM's New Export Orders Index for October registered 59.6 percent, an increase of 6.7 percentage points when compared to September's index of 52.9 percent. This is the 22nd consecutive month of growth in export orders. The 11 industries reporting growth in new export orders in October are: Paper; Instruments & Photographic Equipment; Industrial & Commercial Equipment & Computers; Wood & Wood Products; Fabricated Metals; Electronic Components & Equipment; Furniture; Chemicals; Transportation & Equipment; Miscellaneous*; and Primary Metals.
Imports
Imports of materials by manufacturers grew during October as the Imports Index registered 57.3 percent. The index declined 3.4 percentage points when compared to September's index of 60.7 percent. The 10 industries reporting growth in import activity for October are: Tobacco; Textiles; Furniture; Paper; Electronic Components & Equipment; Fabricated Metals; Industrial & Commercial Equipment & Computers; Instruments & Photographic Equipment; Chemicals; and Rubber & Plastic Products.
Buying Policy
Average commitment leadtime for Capital Expenditures increased 4 days to 103 days. Average leadtime for Production Materials increased 1 day to 46 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies decreased 1 day to 22 days.
In Short Supply
Plywood is the only commodity reported in short supply.
Up in Price
Beef; Copper — 3rd month; Crude Oil; Lumber — 2nd month; Natural Gas* — 15th month; Nickel — 3rd month; Plastic Resin; Poly Bags; Polyethylene Film; Stainless Steel; Steel; and Sulfuric Acid.
Down in Price
Caustic Soda — 3rd month; Corrugated — 8th month; Gasoline; and Natural Gas*— 7th month.
*Reported as both up and down in price.
The data presented herein is obtained from a survey of manufacturing supply managers 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. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
The Manufacturing ISM Report On Business® is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. Membership of the Business Survey Committee is diversified by Standard Industrial Classification (SIC) category, based on each industry's contribution to Gross Domestic Product (GDP). Twenty industries from various U.S. geographical areas are represented on the committee. The 20 manufacturing Standard Industry Classification codes are: Food; Tobacco; Textiles; Apparel; Wood & Wood Products; Furniture; Paper; Printing & Publishing; Chemicals; Petroleum; Rubber & Plastic Products; Leather; Glass, Stone, & Aggregate; Primary Metals; Fabricated Metals; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Transportation & Equipment; Instruments & Photographic Equipment; and Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments).
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 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 supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indices for five of the indicators with varying weights: New Orders – 30%; Production – 25%; Employment – 20%; Supplier Deliveries – 15%; and Inventories – 10%.
Diffusion indices 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 that it is generally declining. A PMI over 42.9 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding; below 42.9 percent, it is generally declining. The distance from 50 percent or 42.9 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.
Responses to Buying Policy reflect the percent reporting the current month's leadtime, the approximate weighted number of days ahead for which commitments are made for Production Materials, Capital Expenditures, 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.
The data presented herein is obtained from a survey of manufacturing supply managers 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. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision making.
The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management™. The Institute for Supply Management™, established in 1915, is the world's leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. The report has been issued by the association since 1931, except for a four-year interruption during World War II.
The full text version of the Manufacturing ISM Report On Business® is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).
posted by Dust at 03:40
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