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Strong Demand Pushes Manufacturing Forward New ISM Report Says Getty Images

Strong Demand Pushes Manufacturing Forward New ISM Report Says

The manufacturing sector continues to expand, reversing December’s weak expansion, but inputs and prices indicate fundamental changes in supply chain constraints.

Economic activity in the manufacturing sector expanded in January, and the overall economy grew for the 117th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The January PMI registered 56.6%, an increase of 2.3 percentage points from the December reading of 54.3 %

 “Exports continue to expand, but at the lowest level since the fourth quarter of 2016," says Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management. Prices contracted for the first time since the first quarter of 2016. The manufacturing sector continues to expand, reversing December’s weak expansion, but inputs and prices indicate fundamental changes in supply chain constraints,” says Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management.

 Key Findings 

  •  The New Orders Index registered 58.2%, an increase of 6.9 percentage points from the December reading of 51.3%.
  • The Production Index registered 60.5%, 6.4-percentage point increase compared to the December reading of 54.1%.
  • The Employment Index registered 55.5%, a decrease of 0.5 percentage point from the December reading of 56%.
  • The Supplier Deliveries Index registered 56.2%, a 2.8 percentage point decrease from the December reading of 59%.
  • The Inventories Index registered 52.8%, an increase of 1.6 percentage points from the December reading of 51.2%.
  •  The Prices Index registered 49.6%, a 5.3-percentage point decrease from the December reading of 54.9%, indicating lower raw materials prices for the first time in nearly three years.

What Respondents to Survey are Saying

-- “Unlike in the last few years, we are experiencing a first-quarter slowdown.” (Paper Products)

-- “Steady supply and production environment.” (Computer & Electronic Products)

--  “Concerns about oil prices are fueling questions of how strong the economy will be the first half of 2019.” (Chemical Products)

-- “Overall, business continues to be good; however, margins are being squeezed.” (Transportation Equipment)

·-- “The federal government shutdown is impacting our ability to get new products launched. All wines need TTB [Alcohol and Tobacco Tax and Trade Bureau] approval. We are reforecasting accordingly.” (Food, Beverage & Tobacco Products)

· -- “We continue to enjoy the benefits of a strong general economy. We are busy and maintain a backlog of sales orders.” (Machinery)

·--  “Incoming orders have been steady, but we’re starting to see signs of slowing going into February and March.” (Furniture & Related Products)

--   “Business conditions are good, and our demand and production are tracking to our forecasted growth levels for the year.” (Miscellaneous Manufacturing)

--   “Going to be a very strong spring. Business levels will be just as good [compared to] the same time frame in 2018.” (Fabricated Metal Products)

--   “Steel tariffs continue to put upward pressure on prices of downstream materials.” (Petroleum & Coal Products)

--  “January is off to a good start versus a lower November and December. We are ahead of both plan and January 2018 performance.” (Plastics and Rubber Products)

--  “Sales nationally appear to be on target for 2019 and slightly ahead of 2018.” (Nonmetallic Mineral Products)

 

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