Manufacturing Sector Still Expanding- May 2012 ISM PMI Report

Economic activity in the manufacturing sector expanded in May for the 34th consecutive month, and the overall economy grew for the 36th consecutive monthFabricated metals was one of 13 sectors reporting expansion in May.

According to ISM’s Bradley J. Holcomb, “The PMI registered 53.5 percent, a modest decrease of 1.3 percentage points from April’s reading of 54.8 percent, indicating expansion in the manufacturing sector for the 34th consecutive month. The New Orders Index continued its growth trend for the 37th consecutive month, registering 60.1 percent in May. This represents an increase of 1.9 percentage points from April and also the highest level recorded by the index since April 2011. The Prices Index for raw materials fell to 47.5 percent in May, dropping 13.5 percentage points from April, indicating lower prices for the first time since December 2011. Comments from the panel generally reflect stable-to-strong orders, with sales showing steady improvement over the first five months of 2012.”

The dropping of the price index for raw materials is noteworthy, being the first such drop since December 2011.

Certainly the global uncertainty is likely to affect our markets in the coming months, but for now North American Manufacturing continues to lead the recovery.

PMPA’s Business Trends Report for the first four months of the year is consistent with The latest ISM report and indicates that the industry’s 2012 average shipments will likely finish up 8 to 9 points higher than last year.

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3 Responses to Manufacturing Sector Still Expanding- May 2012 ISM PMI Report

  1. Manmohan says:

    Interesting information. Readers interested in the state of American manufacturing , take part in this survey http://bit.ly/M3jXjb on Manufacturing and Distribution and get a free copy of the report .

  2. What’s Ohio Gonna Do?

    The entire Midwest and Northeast is at risk. Take a look around.
    The Industrial Revolution is over. In its wake tens of thousands of brick coffins are strewn all over our cities, towns and countryside. These brick coffins are in the form of abandoned factories, plating shops, manufacturing and assembly operations, casting and forging plants. The dilemma here is that these buildings are all “sick” or contaminated; including the footprint it stands on. Cadmium, chromium, muriatic acid, benzene, chlorine, acetone, sulphuric, hydrochloric, chemical salts of various kinds, asbestos and lead all play a role in the buildings’ fate. This needs to be framed as an environmental catastrophe. Ohio has phased out the inventory tax in hopes that it can build interest in using these buildings as possible warehouse space. This may be a tempting use for distribution centers or large depots. But herein lies the real problem. In order to inhabit these buildings a Certificate of Occupancy must be issued by the government certifying that the building is in fact safe and does not pose any threat to the environment, health and safety. Some buildings are still in use and may have been updated over time and are grandfathered in. The problem is enormous in Ohio and throughout the Midwest and Northeast. It is everywhere. You can’t just demolish the building and start over. You can’t remodel into condos or rental flats. It is the ground that is also contaminated. If you live in the area, it goes unnoticed for the most part because you see it everyday. Another problem, surfacing now, is that some manufacturing companies are forsaking workers’ health and safety and are renting space in these buildings for ridiculously low rents, and bypassing compliance. Doing this makes them more profitable, so they think. In some cases, they are bypassing or ignoring the Certificate of Occupancy by pretending they are a warehouse and overproducing, which they can given no inventory tax. In other cases the owners may be silent on the true nature of the building’s status, when leasing. Whatever the case, this is a dangerous path to be on. The enormity of this problem will bankrupt governments, destroy neighborhoods and ruin peoples’ lives. The devastation is similar to what happens when an oil company has depleted all the oil in a region. They just leave. This will make the housing crisis pale in comparison. The easy answers are bankruptcy, look the other way with complete disregard for human life and safety, or break the law and hope you don’t get caught. Changing legislation, may help, but is not a sustainable solution. The problem will not go away by itself. It may be necessary to designate some of these areas as “super fund sites”. Another thought would be land lease bonds, similar to a renter’s deposit. Everyone needs to get involved, all levels of government, insurance companies and the private sector. We need serious people to do serious things.

    • speakingofprecision says:

      Well Bill, That is certainly a different point of view than I expected. As a manufacturing guy, Certainly you know that manufacturing is far from over here in the US, and while everyone cries about China, the fact is that the US manufactures more stuff than Brazil Russia, India and China combined.Or to compare another way, more than the combined manufacturing output of Germany, Italy, France, UK, and South Korea. So The death of manufacturing here is not a fact.

      Do you have any sources with facts to support your claims about the chemicals at the vacant buildings? I’m not at all convinced that “environmental catastrophe” is warranted. Thanks for sharing you opinion.

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