Despite our addiction to ever changing news-cycle dramatic headlines, the increase of just a skosh (0.1 percentage point from April’s 54.8 percent to 54.9 percent) signifies that manufacturing is still expanding- albeit very slowly. At 54.9 percent, the ISM PMI Index remains strongly above 50 percent, indicating that the manufacturing economy is generally expanding.
According to Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, the New Orders Index also increased 2 percent while Production Index declined 1.5 percent. Fabricated Metals was one of the 15 manufacturing industries that reported growth in May.
Our April PMPA Business Trends Index showed us that 2017 will be a strong year for our industry. This latest ISM PMI report is one more piece of evidence that supports that. Here is what Fiore had to say,“The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through May (56.1 percent) corresponds to a 4.0 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for May (54.9 percent) is annualized, it corresponds to a 3.7 percent increase in real GDP annually.”
Precision machined products are crucial enablers of today’s technologies. the increase in GDP indicated by this latest ISM PMI report argues for an equivalent increase in the precision machined products our shops manufacture for the same period.
We hope that you are managing your shop for success. Our savvy shops are.
Graph Courtesy Calculated Risk Blog