Dépêches

August Manufacturing ISM Report On Business®; PMI at 50.6%; Employment and Inventories Growing; Supplier Deliveries Slower; New Orders and Production Contracting

Dépèche transmise le 1 septembre 2011 par Business Wire

TEMPE, Ariz.--(BUSINESS WIRE)--Economic activity in the manufacturing sector expanded in August for the 25th consecutive month, and the overall economy grew for the 27th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

“Current headwinds in the national and international economic environment have increased uncertainty, and are affecting our customers’ willingness to commit to high-dollar equipment purchases.”

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The PMI registered 50.6 percent, a decrease of 0.3 percentage point from July, indicating expansion in the manufacturing sector for the 25th consecutive month, at a slightly slower rate. The Production Index registered 48.6 percent, indicating contraction for the first time since May of 2009, when it registered 45 percent. The New Orders and Backlog of Orders Indexes edged up slightly from July, but both indexes are indicating contraction in August at slower rates than in July. The rate of increase in prices slowed for the fourth consecutive month, dropping another 3.5 percentage points in August to 55.5 percent. The overall sentiment is one of concern and caution over the domestic and international economic environment, which is affecting customers’ confidence and willingness to place orders, at least in the short term.”

PERFORMANCE BY INDUSTRY

Of the 18 manufacturing industries, 10 are reporting growth in August, in the following order: Wood Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Fabricated Metal Products; Paper Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Machinery. The six industries reporting contraction in August — listed in order — are: Plastics & Rubber Products; Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; and Primary Metals.

WHAT RESPONDENTS ARE SAYING …

  • “Earlier chemical price increases are beginning to soften.” (Chemical Products)
  • “Business is soft, confidence is down, and we are cutting inventory and expenses.” (Machinery)
  • “Exports continue to be strong — domestic weak.” (Computer & Electronic Products)
  • “Domestic sales are showing small improvements. International sales are showing larger improvements.” (Fabricated Metal Products)
  • “Demand remains constant and strong.” (Paper Products)
  • “Current headwinds in the national and international economic environment have increased uncertainty, and are affecting our customers’ willingness to commit to high-dollar equipment purchases.” (Transportation Equipment)
  • “We continue to post solid numbers, but the situation seems tenuous.” (Plastics & Rubber Products)
  • “Automotive business (represents 52 percent of our sales portfolio) continues to be strong. Core business has pulled back slightly.” (Apparel, Leather & Allied Products)
  • “Sales continue to be sluggish.” (Furniture & Related Products)

MANUFACTURING AT A GLANCE

AUGUST 2011

                       
Index

Series
Index
Aug

Series
Index
Jul

Percentage
Point
Change

Direction

Rate of
Change

Trend(a)
(Months)

 
PMI 50.6 50.9 -0.3 Growing Slower 25
New Orders 49.6 49.2 +0.4 Contracting Slower 2
Production 48.6 52.3 -3.7 Contracting From Growing 1
Employment 51.8 53.5 -1.7 Growing Slower 23
Supplier Deliveries 50.6 50.4 +0.2 Slowing Faster 27
Inventories 52.3 49.3 +3.0 Growing From Contracting 1
Customers’ Inventories 46.5 44.0 +2.5 Too Low Slower 29
Prices 55.5 59.0 -3.5 Increasing Slower 26
Backlog of Orders 46.0 45.0 +1.0 Contracting Slower 3
Exports 50.5 54.0 -3.5 Growing Slower 26
Imports 55.5 53.5 +2.0 Growing Faster 24
OVERALL ECONOMY

 

Manufacturing Sector

Growing Slower 27
Growing Slower 25

(a) Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum (12); Aluminum Products; Butadiene; Caustic Soda; Copper(b) (13); Copper Based Products (10); Corn; Diesel Fuel; Electric/Electronic Components (2); Freight Rates; Glycol Ether; Hydraulic Components/Motors; Paper; Rubber; Rubber Products (7); Silver; Stainless Steel; and Steel(b) (12).

Commodities Down in Price

Cold Rolled Steel; Copper(b); Natural Gas; Plastic Products; Plastic Resins; Polyethylene Resin; Polypropylene Resin; and Steel(b) (4).

Commodities in Short Supply

Electric/Electronic Components (8); Hydraulic Components/Motors/Pumps; and Titanium Dioxide.

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

(b) Reported as both up and down in price.

AUGUST 2011 MANUFACTURING INDEX SUMMARIES

PMI

Manufacturing continued its growth in August as the PMI registered 50.6 percent, a decrease of 0.3 percentage point when compared to July’s reading of 50.9 percent. The PMI registered the lowest reading since July 2009, when it registered 49 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 27th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 25th consecutive month. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (56.8 percent) corresponds to a 5 percent increase in real gross domestic product (GDP). In addition, if the PMI for August (50.6 percent) is annualized, it corresponds to a 2.8 percent increase in real GDP annually.”

THE LAST 12 MONTHS

          Month                     PMI                                 Month                     PMI
 
Aug 2011 50.6 Feb 2011 61.4
Jul 2011 50.9 Jan 2011 60.8
Jun 2011 55.3 Dec 2010 58.5
May 2011 53.5 Nov 2010 58.2
Apr 2011 60.4 Oct 2010 56.9
Mar 2011 61.2 Sep 2010 55.3

Average for 12 months – 56.9
High – 61.4
Low – 50.6

New Orders

ISM’s New Orders Index registered 49.6 percent in August, which is an increase of 0.4 percentage point when compared to the 49.2 percent reported in July. This is the second consecutive month of contraction in the New Orders Index, following 24 months of growth. The last time the index contracted was in June of 2009, when the New Orders Index registered 48.9 percent. 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 seven industries reporting growth in new orders in August — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Paper Products; Fabricated Metal Products; and Transportation Equipment. The seven industries reporting decreases in new orders in August — listed in order — are: Electrical Equipment, Appliances & Components; Textile Mills; Nonmetallic Mineral Products; Machinery; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products.

New Orders           %Better         %Same         %Worse         Net         Index
 
Aug 2011 22 53 25 -3 49.6
Jul 2011 24 53 23 +1 49.2
Jun 2011 34 43 23 +11 51.6
May 2011 30 54 16 +14 51.0

Production

ISM’s Production Index registered 48.6 percent in August, which is a decrease of 3.7 percentage points when compared to the July reading of 52.3 percent. This is the first month of contraction in the Production Index, following 26 months of growth, and the lowest reading since May 2009 when it registered 45 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The seven industries reporting growth in production during the month of August — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; and Computer & Electronic Products. The six industries reporting a decrease in production in August — listed in order — are: Plastics & Rubber Products; Nonmetallic Mineral Products; Textile Mills; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; and Machinery. Five industries reported no change in production in August compared to July.

Production           %Better         %Same         %Worse         Net         Index
 
Aug 2011 19 62 19 0 48.6
Jul 2011 22 60 18 +4 52.3
Jun 2011 35 46 19 +16 54.5
May 2011 30 56 14 +16 54.0

Employment

ISM’s Employment Index registered 51.8 percent in August, which is 1.7 percentage points lower than the 53.5 percent reported in July. While this month represents the 23rd consecutive month of growth in manufacturing employment, the August reading is also the lowest reading since November 2009, when the index registered 50.4 percent. 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, eight reported growth in employment in August in the following order: Wood Products; Paper Products; Primary Metals; Fabricated Metal Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; and Chemical Products. The six industries reporting a decrease in employment in August — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products.

Employment           %Higher         %Same         %Lower         Net         Index
 
Aug 2011 22 63 15 +7 51.8
Jul 2011 24 63 13 +11 53.5
Jun 2011 34 56 10 +24 59.9
May 2011 31 60 9 +22 58.2

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was nominally slower in August as the Supplier Deliveries Index registered 50.6 percent, which is 0.2 percentage point higher than the 50.4 percent registered in July. This is the 27th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

The 10 industries reporting slower supplier deliveries in August — listed in order — are: Wood Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; Machinery; and Transportation Equipment. The three industries reporting faster deliveries in August are: Primary Metals; Plastics & Rubber Products; and Paper Products. Five industries reported no change in supplier deliveries in August compared to July.

Supplier Deliveries           %Slower         %Same         %Faster         Net         Index
 
Aug 2011 12 81 7 +5 50.6
Jul 2011 13 80 7 +6 50.4
Jun 2011 18 78 4 +14 56.3
May 2011 22 70 8 +14 55.7

Inventories

The Inventories Index registered 52.3 percent in August, 3 percentage points higher than the 49.3 percent reported in July. 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 eight industries reporting higher inventories in August — listed in order — are: Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Chemical Products; Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The seven industries reporting decreases in inventories in August — listed in order — are: Plastics & Rubber Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Textile Mills; Miscellaneous Manufacturing; Paper Products; and Petroleum & Coal Products.

Inventories           %Higher         %Same         %Lower         Net         Index
 
Aug 2011 23 63 14 +9 52.3
Jul 2011 18 60 22 -4 49.3
Jun 2011 23 61 16 +7 54.1
May 2011 20 57 23 -3 48.7

Customers’ Inventories(c)

The ISM Customers’ Inventories Index registered 46.5 percent in August, 2.5 percentage points higher than in July when the index registered 44 percent. This is the 29th 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 two manufacturing industries reporting customers’ inventories as being too high during August are: Apparel, Leather & Allied Products; and Computer & Electronic Products. The nine industries reporting customers’ inventories as too low during August — listed in order — are: Nonmetallic Mineral Products; Paper Products; Textile Mills; Primary Metals; Printing & Related Support Activities; Transportation Equipment; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Fabricated Metal Products. Six industries reported no change in customers’ inventories for the month of August compared to July.

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Customers’ Inventories          

%
Reporting

   

%Too
High

   

%About
Right

   

%Too
Low

    Net     Index
 
Aug 2011 73 15 63 22 -7 46.5
Jul 2011 72 11 66 23 -12 44.0
Jun 2011 70 13 68 19 -6 47.0
May 2011 72 6 67 27