Positive indicators for our precision machining shops from ISM and PMPA.
According to today’s release of the January 2018 Institute for Supply Management -Purchasing Manager’s Index, economic activity in the manufacturing sector expanded in January, although at a slower rate than in December 2017. The January PMI came in at 59.1%, down 0.2% from 59.3% in December.
A reading above 50 percent in the PMI indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
While the ISM-PMI report highlighted slight declines in the following indicators for our manufacturing businesses, they still bode well for manufacturing’s strength:
- The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent.
- The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent.
- The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent.
Other comments from this report that convey positivity for our sector including “expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January.” These all signal that manufacturing continues to be very busy up and down the supply chain. The “Customer’s inventories being too low,” comment tells me that there will continue to be strength in demand for manufactured goods in the coming months.
PMPA’s own Business Trends Report for December 2017 and year end summary reported that our companies’ sales were up 6.8% over calendar year 2016’s levels. This January ISM PMI report continues the positive outlook for manufacturing. PMPA Year End Summary Blog Post
Calculated Risk Chart of January 2018 ISM PMI