Thursday, November 3, 2011

USA Manufacturing Growth Dips (Chart) "More concern & caution about growth in uncertain economy"


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 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.

Trend The October 2011 Purchasing Managers' Index (PMI) of 50.8 decreased -0.8 and has decreased 6 of the past 8 months from the February 2011 peak of 61.4. The short-term trend is now level, the intermediate-term trend continues downwards, and the long-term trend continues downwards.

Cycle History The ISM Manufacturing PMI reached a Post-Great Recession peak of 61.4 in February 2011. A Great Recession cyclical low of 33.3 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) including the latest month reported. The PMI has been greater than 50, indicating USA manufacturing is expanding, since August 2009, for 27 consecutive months. The PMI reached a first Post-Great Recession peak in March 2010 at 60.4 and a higher peak in February 2011 at 61.4However, a PMI greater than 50 indicates USA manufacturing is expanding even when the monthly PMI was decreasing in some months in 2010 and 2011, just at a slower rate.

Commentary The +0.8 decrease in the October 2011 PMI to 50.8 is disappointing and continues the bottom-bouncing near the 50.0 benchmark. This still indicates USA manufacturing has slowed considerably, to near stalling. The PMI has decreased 6 of the past 8 months, since the February 2011 peak and Post-Great Recession high. However, the USA manufacturing sector continued to expand for the 27th consecutive month (PMI greater than 50.0) and the overall economy continues to expand for the 29th 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, slower
● Overall USA Economy growing, slower
● New Orders growing, from contracting
● Production growing, slower
● Employment growing, slower
● Supplier Deliveries slowing, slower
● Inventories contracting, from growing
● Customer Inventories too low, faster
● Prices decreasing, from increasing
● Backlog of Orders contracting, slower
● Exports unchanged, from growing
● Imports contracting, from growing

Commenting on the Report 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."

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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