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March Manufacturing ISM Report On Business®; PMI at 61.2%; New Orders, Production and Employment Growing; Supplier Deliveries Slower; Inventories Contracting

Dépèche transmise le 1 avril 2011 par Business Wire

March Manufacturing ISM Report On Business®; PMI at 61.2%; New Orders, Production and Employment Growing; Supplier Deliveries Slower; Inventories Contracting

March Manufacturing ISM Report On Business®; PMI at 61.2%; New Orders, Production and Employment Growing; Supplier Deliveries Slower; Inventories Contracting

TEMPE, Ariz.--(BUSINESS WIRE)--Economic activity in the manufacturing sector expanded in March for the 20th consecutive month, and the overall economy grew for the 22nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

“Customer orders have picked up nicely. [This is] likely in anticipation of increasing prices due to commodity costs that will likely happen over next month.”

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The recent trend of rapid growth in the manufacturing sector continued in March, as the PMI registered above 60 percent for the third consecutive month. The component indexes of the PMI remain at very positive levels and signal strong sector performance in the first quarter. While manufacturers are benefiting from strength in new orders and production, there is significant concern with regard to commodity prices. Many manufacturers indicate the prices they have to pay for inputs are rising, and there is concern about the impact of higher prices on their margins.”

PERFORMANCE BY INDUSTRY

Of the 18 manufacturing industries, 15 are reporting growth in March, in the following order: Apparel, Leather & Allied Products; Transportation Equipment; Fabricated Metal Products; Machinery; Textile Mills; Computer & Electronic Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Paper Products; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Printing & Related Support Activities. The two industries reporting contraction in March are: Wood Products and Primary Metals.

WHAT RESPONDENTS ARE SAYING …

  • “Customer orders have picked up nicely. [This is] likely in anticipation of increasing prices due to commodity costs that will likely happen over next month.” (Food, Beverage & Tobacco Products)
  • “New orders continue at a robust pace this month.” (Miscellaneous Manufacturing)
  • “What will be the impact to the U.S. supply chain after the devastation caused by the Japan earthquake?” (Chemical Products)
  • “The building side of our business is mired with little hope of a rebound anytime soon.” (Fabricated Metal Products)
  • “Steel and certain steel products causing concern over price increases and availability.” (Machinery)

MANUFACTURING AT A GLANCE
MARCH 2011

           
Index

Series
Index
March

Series
Index
February

Percentage
Point
Change

Direction

Rate
of Change

Trend(a)
(Months)

 
PMI 61.2 61.4 -0.2 Growing Slower 20
New Orders 63.3 68.0 -4.7 Growing Slower 21
Production 69.0 66.3 +2.7 Growing Faster 22
Employment 63.0 64.5 -1.5 Growing Slower 18
Supplier Deliveries 63.1 59.4 +3.7 Slowing Faster 22
Inventories 47.4 48.8 -1.4 Contracting Faster 2
Customers’ Inventories 39.5 40.0 -0.5 Too Low Faster 24
Prices 85.0 82.0 +3.0 Increasing Faster 21
Backlog of Orders 52.5 59.0 -6.5 Growing Slower 3
Exports 56.0 62.5 -6.5 Growing Slower 21
Imports 56.5 55.0 +1.5 Growing Faster 19
OVERALL ECONOMY

 

Manufacturing Sector

Growing Slower 22
Growing Slower 20

(a) Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum (7); Aluminum Products (3); Brass (4); Caustic Soda; Chemicals; Cocoa/Cocoa Powder (2); Copper (8); Copper Based Products (5); Corn (7); Corn Syrup; Diesel (4); Electronic Components; Fuel Oils (3); Fuel Surcharges; High Density Polyethylene; Nickel (2); PET; Plastics (3); Plastic Products (3); Plastic Resins (5); Polyethylene (2); Polyethylene Resin (3); Polypropylene (3); Resins; Resin Based Products; Rubber; Rubber Products (2); Silver; Stainless Steel (5); Steel (7); Steel — Hot Rolled (2); Steel Products (4); Steel Surcharges (3); Sugar (3); and Transportation Rates.

Commodities Down in Price

Natural Gas is the only commodity reported down in price.

Commodities in Short Supply

Cocoa Powder (2); Electric Components (3); and Titanium Dioxide.

Note: The number of consecutive months the commodity is listed is indicated after each item.

MARCH 2011 MANUFACTURING INDEX SUMMARIES

PMI

Manufacturing continued its rapid growth in March as the PMI registered 61.2 percent, a decrease of 0.2 percentage point when compared to February’s reading of 61.4 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 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 22nd consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 20th consecutive month. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through March (61.1 percent) corresponds to a 6.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for March (61.2 percent) is annualized, it corresponds to a 6.5 percent increase in real GDP annually.”

THE LAST 12 MONTHS

          Month                     PMI                             Month                     PMI
 
Mar 2011 61.2 Sep 2010 55.3
Feb 2011 61.4 Aug 2010 55.2
Jan 2011 60.8 Jul 2010 55.1
Dec 2010 58.5 Jun 2010 55.3
Nov 2010 58.2 May 2010 57.8
Oct 2010 56.9 Apr 2010 59.6

Average for 12 months – 57.9
High – 61.4
Low – 55.1

New Orders

ISM’s New Orders Index registered 63.3 percent in March, which is a decrease of 4.7 percentage points when compared to the 68 percent reported in February. This is the 21st consecutive month of growth in the New Orders Index. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 14 industries reporting growth in new orders in March — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Transportation Equipment; Fabricated Metal Products; Textile Mills; Paper Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Chemical Products; Machinery; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. The two industries reporting decreases in new orders in March are: Wood Products and Primary Metals.

New Orders           %Better         %Same           %Worse         Net         Index
 
Mar 2011 43 47 10 +33 63.3
Feb 2011 43 46 11 +32 68.0
Jan 2011 46 36 18 +28 67.8
Dec 2010 31 47 22 +9 62.0

Production

ISM’s Production Index registered 69 percent in March, which is an increase of 2.7 percentage points from the February reading of 66.3 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the 22nd consecutive month the Production Index has registered above 50 percent.

The 14 industries reporting growth in production during the month of March — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Paper Products; Food, Beverage & Tobacco Products; Machinery; Petroleum & Coal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Chemical Products. The two industries reporting a decrease in production in March are: Printing & Related Support Activities; and Primary Metals.

Production           %Better         %Same         %Worse         Net         Index
 
Mar 2011 41 52 7 +34 69.0
Feb 2011 43 47 10 +33 66.3
Jan 2011 40 44 16 +24 63.5
Dec 2010 30 52 18 +12 63.0

Employment

ISM’s Employment Index registered 63 percent in March, which is 1.5 percentage points lower than the 64.5 percent reported in February. This is the 18th consecutive month of growth in manufacturing employment. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, 12 reported growth in employment in March in the following order: Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Textile Mills; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Paper Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities; and Fabricated Metal Products. The two industries reporting a decrease in employment during March are: Wood Products; and Petroleum & Coal Products.

Employment           %Higher         %Same         %Lower         Net         Index
 
Mar 2011 33 59 8 +25 63.0
Feb 2011 35 56 9 +26 64.5
Jan 2011 24 69 7 +17 61.7
Dec 2010 22 66 12 +10 58.9

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in March as the Supplier Deliveries Index registered 63.1 percent, which is 3.7 percentage points higher than the 59.4 percent registered in February. This is the 22nd consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

The 11 industries reporting slower supplier deliveries in March — listed in order — are: Machinery; Apparel, Leather & Allied Products; Fabricated Metal Products; Transportation Equipment; Petroleum & Coal Products; Primary Metals; Plastics & Rubber Products; Computer & Electronic Products; Chemical Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. None of the manufacturing industries reported faster deliveries in March.

Supplier Deliveries           %Slower         %Same         %Faster         Net         Index
 
Mar 2011 26 73 1 +25 63.1
Feb 2011 24 69 7 +17 59.4
Jan 2011 18 77 5 +13 58.6
Dec 2010 15 78 7 +8 56.7

Inventories

Manufacturers’ inventories declined in March for the second consecutive month. The Inventories Index registered 47.4 percent, 1.4 percentage points less than the 48.8 percent recorded for February. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis’ (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The seven industries reporting higher inventories in March — listed in order — are: Apparel, Leather & Allied Products; Fabricated Metal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; and Machinery. The eight industries reporting decreases in inventories in March — listed in order — are: Plastics & Rubber Products; Primary Metals; Petroleum & Coal Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Paper Products; and Transportation Equipment.

Inventories           %Higher         %Same         %Lower         Net         Index
 
Mar 2011 19 60 21 -2 47.4
Feb 2011 19 63 18 +1 48.8
Jan 2011 25 54 21 +4 52.4
Dec 2010 24 52 24 0 51.8

Customers’ Inventories(b)

The ISM Customers’ Inventories Index registered 39.5 percent in March, 0.5 percentage point lower than in February when the index registered 40 percent. This is the 24th consecutive month the Customers’ Inventories Index has been below 50 percent, indicating that respondents believe their customers’ inventories are too low at this time.

The only manufacturing industry reporting customers’ inventories as being too high during March is Primary Metals. The 11 industries reporting customers’ inventories as too low during March — listed in order — are: Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Fabricated Metal Products.

Customers’ Inventories          

%
Reporting

   

%Too
High

   

%About
Right

    %Too Low     Net     Index
 
Mar 2011 62 11 57 32 -21 39.5
Feb 2011 66 7 66 27 -20 40.0
Jan 2011 63 11 69 20 -9 45.5
Dec 2010 67 8 64 28 -20 40.0

Prices(b)

The ISM Prices Index registered 85 percent in March, 3 percentage points higher than the 82 percent reported in February and the highest reading since July 2008 when the index registered 88.5 percent. This is the 21st consecutive month the Prices Index has registered above 50 percent. While 72 percent of respondents reported paying higher prices and 2 percent reported paying lower prices, 26 percent of supply executives reported paying the same prices as in February. A Prices Index above 49.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

All 18 manufacturing industries report paying increased prices during the month of March in the following order: Textile Mills; Apparel, Leather & Allied Products; Wood Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; Machinery; Transportation Equipment; Primary Metals; Chemical Products; Paper Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Printing & Related Support Activities; Computer & Electronic Products; Petroleum & Coal Products; and Plastics & Rubber Products.

Prices           %Higher         %Same         %Lower         Net         Index
 
Mar 2011 72 26 2 +70

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