November ISM Report-Manufacturing Sustains its Strength

 

” Economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.”

Manufacturing sustains expansion in November 2014

Manufacturing sustains expansion in November 2014

” “The November PMI® registered 58.7 percent, a decrease of 0.3 percentage point from October’s reading of 59 percent, indicating continued expansion in manufacturing. This is consistent with a 5.1% annualized rate of change in inflation adjusted GDP.”

This was above expectations  and indicates a sustained expansion of manufacturing.

In other good news for our manufacturing shops – ISM’s Miscellaneous Manufacturing; Fabricated Metal Products;  Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; Transportation Equipment; and Primary Metals  respondents reported growth in November.

“The New Orders Index registered 66 percent, an increase of 0.2 percentage point from the reading of 65.8 percent in October.  The Employment Index grew for the 17th consecutive month, registering 54.9 percent, a decrease of 0.6 percentage point below the October reading of 55.5 percent.”

These are all positive indicators for manufacturing.

Materials impact in November

Inventories of raw materials registered 51.5 percent, a decrease of 1 percentage point from the October reading of 52.5 percent. The Prices Index registered 44.5 percent, down 9 percentage points from the October reading of 53.5 percent, indicating lower raw materials prices in November relative to October. This is a major change from the strength of the prices index in the recent past.

How this relates to our precision machining shops:

The PMPA Business Trends Index for October increased a whopping 13 points (10.9%) from 119 to 132.  This is the highest value for our index, ever.   While this was an unexpected show of strength for our industry, we did confirm our data and noted that over 40% of respondents reported double digit sales increases for October.

The ISM PMI  indicator’s strength in November leads me to believe that our shops will also report stronger than expected results in our November Business Trends Report.

How is your shop dealing with the unexpected strength in demand for your products?

ISM November Release
Calculated Risk Blog PMI Graph

 

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