Sunday, July 3, 2011

USA Manufacturing Growth Increases in June (Chart) *Sector expands for 23rd month*

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USA Manufacturing PMI (Purchasing Managers' Index) by the Institute for Supply Management


Official Statement by the Institute for Supply Management (Tempe, Arizona) - Economic activity in the manufacturing sector expanded in June for the 23rd consecutive month, and the overall economy grew for the 25th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business. 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 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month. New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent. The rate of increase in prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68 percent. This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5 percent. While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries."

Trend The short-term trend has reversed to upwards after 3 prior monthly decreases and has been below the benchmark 60.0 after 2 consecutive months. The intermediate-term trend (6 months) is downwards and the long-term trend (12 months) is level.

Cycle History The ISM Manufacturing PMI reached a Post-Great Recession peak of 61.4 in February 2011. A Great Recession cyclical low of 32.5 was set in December 2008. The PMI is a percentage - not a total. More about the PMI below the chart.

ISM Monthly Manufacturing PMI (Chart) Below is a chart of the Purchasing Managers' Index (PMI) from cyclical low, the Great Recession low of 32.5 in December 2008 through the latest month reported. The PMI has been greater than 50, indicating USA manufacturing is expanding, since August 2009, for 23 consecutive months. As can be seen, the PMI bottomed in December 2008 at 32.5, ascended significantly through August 2009 to 52.8, the first time above 50 since January 2008. The PMI continued upwards to an  intermediate-term peak of 60.4 in March 2010. A Post-Great Recession peak was reached in February 2011. However, a PMI greater than 50 indicates USA manufacturing is expanding even when the monthly PMI was decreasing in some months in 2010, just at a slower rate.


Commentary The +1.8 increase in the June 2011 PMI is very encouraging and indicates USA manufacturing expansion has stabilized and increased, after 3 prior month declines in growth. The USA manufacturing sector continued to expand for the 23rd consecutive month (PMI greater than 50.0) and the overall economy continues to expand for the 25th consecutive month (PMI greater than 42.5). Key points of the current report (Direction, Rate of Change):
● Purchasing Managers' Index (PMI), USA Manufacturing Sector, growing, faster
● Overall USA Economy growing, faster
● New Orders, Production, Employment, growing, faster
● Exports, Imports growing slower
● Inventories growing, from contracting
● Supplier Deliveries slowing, faster
● Backlog of Orders contracting, from growing
● Customer Inventories too low, slower
● Prices increasing, slower

About the PMI The ISM describes the PMI, the USA manufacturing metric as: 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. The PMI is a composite of five indexes: New Orders, Production, Employment, Supplier Deliveries, and Inventories. 18 manufacturing industries are included: Miscellaneous Manufacturing; Printing & Related Support Activities; Computer & Electronic Products; Paper Products; Textile Mills; Petroleum & Coal Products; Nonmetallic Mineral Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; Machinery; and Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Apparel, Leather & Allied Products; Primary Metals; Wood Products; and Food, Beverage & Tobacco Products.

About the Institute for Supply Management The Institute for Supply Management established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education.


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*Data courtesy of the Institute for Supply Management*


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