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October Manufacturing ISM Report On Business®; PMI at 50.8%; New Orders, Production and Employment Growing; Supplier Deliveries Slowing; Inventories Contracting

Dépèche transmise le 1 novembre 2011 par Business Wire

TEMPE, Ariz.--(BUSINESS WIRE)--Economic activity in the manufacturing sector expanded in October for the 27th consecutive month, and the overall economy grew for the 29th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

“Business is very strong, both domestically and internationally.”

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 50.8 percent, a decrease of 0.8 percentage point from September’s reading of 51.6 percent, indicating expansion in the manufacturing sector for the 27th consecutive month. The New Orders Index increased 2.8 percentage points from September to 52.4 percent, indicating a return to growth after three months of contraction. The Prices Index, at 41 percent, dropped 15 percentage points, and is below the 50 percent mark for the first time since May 2009 when it registered 43.5 percent. Inventories decreased to 46.7 percent, which is 5.3 percentage points below the September reading of 52 percent. Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy.”

PERFORMANCE BY INDUSTRY

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

WHAT RESPONDENTS ARE SAYING …

  • “Starting to see some deflation on raw materials.” (Chemical Products)
  • “Overall industry volumes remain flat vs. previous month. Uncertainty in supply chain is increasing due to lower volumes vs. historical.” (Electrical Equipment, Appliances & Components)
  • “International: contraction in demand for our products is driving mitigation of excess material on order. Contract manufacturers are adjusting their resources accordingly.” (Machinery)
  • “Business is very strong, both domestically and internationally.” (Fabricated Metal Products)
  • “With metal prices declining, we are seeing some short-term forecast strength. If metal pricing increases again, this strength is expected to disappear again.” (Primary Metals)
  • “Auto industry still strong.” (Transportation Equipment)
  • “Business is slowing — not crashing — but uncertainty and caution is the order of the day.” (Plastics & Rubber Products)
  • “Retail branded business is slower than expected due to consumers continuing to move to private label- and store-brand products for price advantage. Raw material supplies are in good shape, but prices are staying stubbornly higher than expected.” (Food, Beverage & Tobacco Products)

MANUFACTURING AT A GLANCE
OCTOBER 2011

                       
Index

Series
Index
Oct

Series
Index
Sep

Percentage
Point
Change

Direction

Rate of
Change

Trend(a)
(Months)

 
PMI 50.8 51.6 -0.8 Growing Slower 27
New Orders 52.4 49.6 +2.8 Growing From Contacting 1
Production 50.1 51.2 -1.1 Growing Slower 2
Employment 53.5 53.8 -0.3 Growing Slower 25
Supplier Deliveries 51.3 51.4 -0.1 Slowing Slower 29
Inventories 46.7 52.0 -5.3 Contracting From Growing 1
Customers’ Inventories 43.5 49.0 -5.5 Too Low Faster 31
Prices 41.0 56.0 -15.0 Decreasing From Increasing 1
Backlog of Orders 47.5 41.5 +6.0 Contracting Slower 5
Exports 50.0 53.5 -3.5 Unchanged From Growing 1
Imports 49.5 54.5 -5.0 Contracting From Growing 1
OVERALL ECONOMY

 

Manufacturing Sector

Growing Slower 29
Growing Slower 27

(a) Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum Products(b) (3); Caustic Soda; Copper(b); Steel(b) (14); and Titanium Dioxide (2).

Commodities Down in Price

Alloy Metals; Aluminum (2); Aluminum Products(b) (2); Copper(b) (3); Copper Based Products; Corn; Diesel Fuel; Natural Gas (3); Nickel; Plastic Resins (3); Steel(b) (6); and Steel Products.

Commodities in Short Supply

Castings (2) is the only commodity reported in short supply.

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

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

OCTOBER 2011 MANUFACTURING INDEX SUMMARIES

PMI

Manufacturing continued its growth in October as the PMI registered 50.8 percent, a decrease of 0.8 percentage point when compared to September’s reading of 51.6 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 29th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 27th consecutive month. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through October (55.7 percent) corresponds to a 4.6 percent increase in real gross domestic product (GDP). In addition, if the PMI for October (50.8 percent) is annualized, it corresponds to a 2.9 percent increase in real GDP annually.”

THE LAST 12 MONTHS

          Month           PMI                     Month           PMI
 
Oct 2011 50.8 Apr 2011 60.4
Sep 2011 51.6 Mar 2011 61.2
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

Average for 12 months – 56.1
High – 61.4
Low – 50.6

New Orders

ISM’s New Orders Index registered 52.4 percent in October, which is an increase of 2.8 percentage points when compared to the September reading of 49.6 percent, and represents a return to growth after three consecutive months of contraction. 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 eight industries reporting growth in new orders in October — listed in order — are: Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Primary Metals; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The nine industries reporting decreases in new orders in October — listed in order — are: Wood Products; Textile Mills; Chemical Products; Furniture & Related Products; Printing & Related Support Activities; Paper Products; Transportation Equipment; Machinery; and Apparel, Leather & Allied Products.

New Orders           %Better         %Same         %Worse         Net         Index
 
Oct 2011 22 53 25 -3 52.4
Sep 2011 23 53 24 -1 49.6
Aug 2011 22 53 25 -3 49.6
Jul 2011 24 53 23 +1 49.2

Production

ISM’s Production Index registered 50.1 percent in October, which is a decrease of 1.1 percentage points when compared to the September reading of 51.2 percent, and indicates growth for the second consecutive month. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

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

Production           %Better         %Same         %Worse         Net        

Index

 
Oct 2011 21 59 20 +1 50.1
Sep 2011 23 56 21 +2 51.2
Aug 2011 19 62 19 0 48.6
Jul 2011 22 60 18 +4 52.3

Employment

ISM’s Employment Index registered 53.5 percent in October, which is 0.3 percentage point lower than the 53.8 percent reported in September. This is the 25th consecutive month the Employment Index has been above 50 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 October in the following order: Textile Mills; Primary Metals; Fabricated Metal Products; Petroleum & Coal Products; Transportation Equipment; Paper Products; Machinery; and Computer & Electronic Products. The six industries reporting a decrease in employment in October — listed in order — are: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Chemical Products; Apparel, Leather & Allied Products; and Food, Beverage & Tobacco Products.

Employment           %Higher         %Same         %Lower         Net         Index
 
Oct 2011 22 63 15 +7 53.5
Sep 2011 22 62 16 +6 53.8
Aug 2011 22 63 15 +7 51.8
Jul 2011 24 63 13 +11 53.5

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in October as the Supplier Deliveries Index registered 51.3 percent, which is 0.1 percentage point lower than the 51.4 percent registered in September. This is the 29th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

The five industries reporting slower supplier deliveries in October are: Furniture & Related Products; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The five industries reporting faster deliveries in October are: Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Machinery. Eight industries reported no change in supplier deliveries in October compared to September.

Supplier Deliveries           %Slower         %Same         %Faster         Net         Index
 
Oct 2011 10 81 9 +1 51.3
Sep 2011 12 81 7 +5 51.4
Aug 2011 12 81 7 +5 50.6
Jul 2011 13 80 7 +6 50.4

Inventories

The Inventories Index registered 46.7 percent in October, 5.3 percentage points lower than the 52 percent reported in September. 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 five industries reporting higher inventories in October are: Textile Mills; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Machinery. The 11 industries reporting decreases in inventories in October — listed in order — are: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Primary Metals; Chemical Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Transportation Equipment; Fabricated Metal Products; Plastics & Rubber Products; and Paper Products.

Inventories           %Higher         %Same         %Lower         Net         Index
 
Oct 2011 17 59 24 -7 46.7
Sep 2011 23 58 19 +4 52.0
Aug 2011 23 63 14 +9 52.3
Jul 2011 18 60 22 -4 49.3

Customers’ Inventories(c)

The ISM Customers’ Inventories Index registered 43.5 percent in October, 5.5 percentage points lower than in September when the index registered 49 percent. This is the 31st 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 five manufacturing industries reporting customers’ inventories as being too high during October are: Apparel, Leather & Allied Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Chemical Products. The 11 industries reporting customers’ inventories as too low during October — listed in order — are: Primary Metals; Nonmetallic Mineral Products; Petroleum & Coal Products; Textile Mills; Miscellaneous Manufacturing; Plastics & Rubber Products; Transportation Equipment; Machinery; Paper Products; Computer & Electronic Products; and Fabricated Metal Products.

Customers’ Inventories          

%
Reporting

   

%Too
High

   

%About
Right

   

%Too
Low

    Net     Index
 
Oct 2011 71 12 63 25 -13 43.5
Sep 2011 73 17 64 19 -2 49.0
Aug 2011 73 15 63 22 -7 46.5
Jul 2011 72 11 66 23 -12 44.0

Prices(c)

The ISM Prices Index registered 41 percent in October, 15 percentage points lower than the 56 percent reported in September. This is the sixth consecutive month the Prices Index has registered below 80 percent since December 2010, and is the first month of contraction since May 2009 when the index registered 43.5 percent. The last time the Prices Index decreased more than 15 percentage points was in June 2010, when it registered 57 percent compared to the prior month’s reading of 77.5 percent. In October, 14 percent of respondents reported paying higher prices, 32 percent reported paying lower prices and 54 percent of supply executives reported paying the same prices as in September. 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.

Of the 18 manufacturing industries, only two report paying increased prices during the month of October: Furniture & Related Products; and Computer & Electronic Products. The 13 industries reporting paying lower prices on average during the month of October — listed in order — are: Plastics & Rubber Products; Primary Metals; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; Petroleum & Coal Products; Printing & Related Support Activities; Chemical Products; Paper Products; Miscellaneous Manufacturing; and Fabricated Metal Products.

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Prices           %Higher         %Same         %Lower         Net         Index
 
Oct 2011 14 54