Manufacturing Shows Growth After More Than a Year of Decline

Sept. 3, 2009
The 18-month decline in manufacturing ended in August, according to the Purchasing Managers Index (PMI), which registered 52.9. According to the Institute for Supply Management (ISM), a PMI above 50 indicates growth in the manufacturing economy; below 50 indicates contraction.

The ISM’s August PMI was the highest since June 2007 and four points higher than the 48.9 reported in July. The index grew in each of the last seven months, slowly from January’s low of 35.6 and then more rapidly to reach 44.8 in June.

"The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July,” says Norbert J. Ore, CPSM, CPM, chair of the ISM manufacturing business survey committee. “While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”

Eleven of the 18 manufacturing industries reported growth in August. These industries, listed in order, include textile mills; apparel, leather and allied products; paper products; miscellaneous manufacturing; printing and related support activities; computer and electronic products; transportation equipment; nonmetallic mineral products; electrical equipment, appliances and components; fabricated metal products; and chemical products.

The six industries reporting contraction include primary metals; plastics and rubber products; furniture and related products; wood products; food, beverage and tobacco products; and machinery.

"The August index of 52.9 is the highest since June 2007,” Ore adds. “The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months, and supply chains will have to re-stock to meet this new demand."

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