Strong Optimism Arrives in January ISM-PMI

February 2, 2017

Manufacturing had a very strong January according to ISM-PMI  and as forecast by PMPA Business Trends respondents in our December Report.

 

Up up and away

Up up and away! Growth in Manufacturing sector and the broad economy continues.

Manufacturing expanded in January as the PMI® registered 56 percent, an increase of 1.5 percentage points from the seasonally adjusted December reading of 54.5 percent, indicating growth in manufacturing for the fifth consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI® above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January PMI® indicates growth for the 92nd consecutive month in the overall economy, and indicates growth in the manufacturing sector for the fifth consecutive month.”– Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

The PMPA’s Business Trends Summary and Forecast for December 2016 showed our shops believing that Projected Net Sales in the first quarter of 2017 would be up substantially. Look at the slope of the Blue Line on the chart below.

Sentiment for Sales up sharply for first three months of 2017.

Sentiment for Sales up sharply for first three months of 2017.

We are pleased that the ISM-PMI confirmed our member sentiment expectations for a very strong January. We also hope that you are taking advantage of these opportunities, rather than remaining trapped in “hunker- down” thinking.

Why are we so positive? Bradley Holcomb explains:

 “The past relationship between the PMI® and the overall economy indicates that the PMI® for January (56 percent) corresponds to a 4 percent increase in real gross domestic product (GDP) on an annualized basis.” 

Our industry provides the essential componentry that empowers the functionality of all of those big ticket items that make up so much of GDP- Light vehicles, Aircraft and aerospace, Appliances, Agriculture and Construction equipment, etc, etc.

You will be busy in first quarter of 2017. Our members said so. ISM-PMI confirms it was so in January.

Share your positive optimism and expectations with your team. It is a great way to start a new year.

Postscript: Employment Outlook. In PMPA’s December Business Trends Report, the outlook for Employment was 92% favorable to employment remaining level or increasing. Only 8 % of respondents felt a decline in employment was  foreseeable.

The ISM Employment  Index “registered 56.1 percent in January, an increase of 3.3 percentage points when compared to the seasonally adjusted December reading of 52.8 percent, indicating growth in employment in January for the fourth consecutive month. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.”

It  is clearly a great time to consider a great career in Precision Machining and manufacturing!

Thanks to Calculated Risk Blog for their Chart of the ISM PMI.

 

 

 

 

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