September ISM PMI- Manufacturing Expansion Continues to Strengthen

 

“Economic activity in the manufacturing sector expanded in September, and the overall economy grew for the 100th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.”- ISM PMI

Low inventories, growth in orders and strong production levels drove the PMI to 60.8 from last month’s 58.8. That 2 point increase is the largest monthly increase since May 2004, before the Great Recession

The slope of the line for 2017 tells you what you need to know about manufacturing. Any questions?

“The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent. The New Orders Index registered 64.6 percent, an increase of 4.3 percentage points from the August reading of 60.3 percent. The Production Index registered 62.2 percent, a 1.2 percentage point increase compared to the August reading of 61 percent. The Employment Index registered 60.3 percent, an increase of 0.4 percentage point from the August reading of 59.9 percent. The Supplier Deliveries Index registered 64.4 percent, a 7.3 percentage point increase from the August reading of 57.1 percent. The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent. “- ISM release

The data is why we continue to be optimistic– despite the imminence of the 4th Quarter and its seasonal low demand- LOW INVENTORIES will drive continued demand for our machined products!

Read that last line in the quote above: “The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent.”

Those low inventories mean that demand will need to be met by new orders from our shops.

According to Industry Week: “Orders will probably remain strong in coming months as a gauge of customer inventories held close to a six-year low. What’s more, the ISM’s order backlogs index crept up to the highest level since April 2011, helping explain why more factories are stepping up hiring.”

We’ve been saying that right along in our monthly PMPA Business Trends Reporting. Anecdotal evidence from our shops indicates that lead time issues are causing some shops to off load business with others with open capacity.

We continue to believe that 2017 will be a strong year for shipments of precision machined products.

Chart courtesy of Calculated Risk Blog.

 

 

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