June ISM PMI Positive, Bodes Well for Precision Machining Industry

Update, The June SAAR for Auto sales is over 17 million: http://www.autonews.com/article/20140701/VIDEO/307019968/autonews-now-sales-hit-17-million-pace?cciid=email-autonews-annow&r=5668G6084245G8Y

 

 

“The June PMI® registered 55.3 percent, a decrease of 0.1 percentage point from May’s reading of 55.4 percent, indicating expansion in manufacturing for the 13th consecutive month. The New Orders Index registered 58.9 percent, an increase of 2 percentage points from the 56.9 percent reading in May, indicating growth in new orders for the 13th consecutive month. The Production Index registered 60 percent, 1 percentage point below the May reading of 61 percent. Employment grew for the 12th consecutive month, registering 52.8 percent, the same level of growth as reported in May. Inventories of raw materials remained at 53 percent, the same reading as reported in both May and April. The price of raw materials grew at a slower rate in June, registering 58 percent, down 2 percentage points from May.”

-Bradley J. Holcomb, ISM link

Graph courtesy Calculated Risk Blog

Graph courtesy Calculated Risk Blog

While the PMI dropped 0.1 from May, and production dropped 1.0% from May, New Orders increased by 2%. New orders that our industry wil lbe producing components for.

Why this is a positive sign for the economy:

“The June PMI® indicates growth for the 61st consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 13th consecutive month. The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through June (54.0 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for June (55.3 percent) is annualized, it corresponds to a 4.0 percent increase in real GDP annually.”

15 markets reported growth in June:  Furniture & Related Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Machinery; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; and Paper Products. We have highlighted those served by precision machining industry in Boldface Type.

On a related note, we see that North American Auto sales rate has remained over 16 million for two months now.  Calculated Risk Blog

Automotive is one of the Precision Machining Industry’s most heavily served markets.

The June ISM PMI report bodes well indeed.

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