Manufacturing Growth Confirmed by December Data

The December ISM Purchasing Managers Report confirms that manufacturing continues its recovery and growth – the PMI was up 2.3 points to 55.9%.

 “The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9 percent, its highest reading since April 2006 when it registered 56 percent. This month’s report is quite strong as both the New Orders and Production Indexes are above 60 percent. The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the Customers’ Inventories Index. Customers’ inventories have been ‘too low’ for nine consecutive months, and this month’s index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline.”

Fabricated Metal Products (NAICS 332)*  is one of those  seven industries “still mired in the downturn.” In December  the fabricated metals respondents reported decreases in  backlog,  employment,  customer inventories, and lower prices for materials. On the bright side, both production and  export orders grew for this sector in December 2009.

Fabricated metals may not be out of the woods yet, but...

We may not be out of the woods yet as an industry,   but the sustained low employment and low customer inventories for our industry tell me that the overtime production machine will be gearing up and starting to hum for many of our shops this month.

Bottom Line: Dr. Ken Mayland of Clearview Economics had this to say about the ISM Composite Report for December:

“…if the current reading were to be sustained, that would be consistent with 4.6% real GDP growth.  Folks: that’s “good” growth!”

* Precision Machining  Industry is NAICS 332721, and thus a segment of Fabricated Metal Products Sector.

Share

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s