Manufacturing Contracts in November- ISM PMI

December 8, 2015

The Institute for Supply Management   Purchasing Managers Index (PMI) for the manufacturing sector dropped to 48.6 in November from an October reading of 50.1. The reading, below 50% indicates contraction. This month’s reading  was the lowest since the end of the Great Recession in June 2009.

Manufacturing contracts for first time since

Manufacturing contracts for first time since

The employment index was at 51.3%, up from 47.6% in October, and the new orders index was at 48.9%, down from 52.9%.

The only good news for manufacturing in the ISM release was Manufacturing Employment and Raw Material prices:

  • Employment Index registered 51.3 percent, 3.7 percentage points above the October reading of 47.6 percent.
  • The Prices Index registered 35.5 percent, a decrease of 3.5 percentage points from the October reading of 39 percent, indicating lower raw materials prices for the 13th consecutive month.

Among the manufacturing markets that contracted in November according to the ISM report:

  • Fabricated Metal Products
  • Machinery
  • Primary Metals
  • Electrical Equipment
  • Appliances & Components
  • Computer & Electronic Products

The PMPA’s Business Trends Report for October came in at 119 for October – down two points from last month’s 121, down 12 points from October 2014’s record of 131, and interestingly, exactly the same value as the average for October for the past five years – 118.8 or 119. Our report also showed expectations for employment leveling off in October.

PMPA October 2015 Business Trends Report

Graph Courtesy Calculated Risk Blog


Top Ten Employment Gaining Sectors in Manufacturing November 2011

December 7, 2011

Just the top five manufacturing sectors shown below contributed 239,900 net new jobs in 2011 year to date through November  according to BLS data.

Leading the way. Data through November.

Precision Machine shops like PMPA members are impacted as follows :

Transportation Equipment: This sector makes up a large share of precision machined industry shipments.

Fabricated Metals: 1)  Precision machining is a subset of Fabricated Metals. From our conversations with shop owners almost every shop is looking for skilled people for immediate work; 2) Many of our products are sold to customers that are also considered Fabricated Metals.

Machinery: We both purchase machinery and make components that are critical to the manufacture of machinery and equipment.

Motor Vehicles and Parts: This is traditionally the largest market served by the precision machining industry.

Primary Metals: Our suppliers of the majority of raw materials machined.

Semiconductors, Computers : Yep. We make parts for these as well as equipment used in their manufacture.

Beverages and Tobacco: That fountain drink you purchased  probably was dispensed through nozzles and fittings made by a precision machine shop.

Chemicals: We make important sensor, fitting, and pressure vessel components for theis Better things for better living industry.

Bottom Line: almost a quarter million net new manufacturing jobs have been added so far in 2011 in manufacturing areas directly related to proecision machining.

Manufacturing, not politicians, is leading this recovery in jobs.

Soda Fountain


Rail Shipment Indicator- Manufacturing and the Tangible Economy

December 14, 2010

When I was a blast furnace burden clerk at USS back in the 1970’s, the hot metal production that I reported was the CEO’s critical indicator for the Company. He knew that he couldn’t possibly track every product and process in the far flung USS empire. 

However, he did know that he couldn’t get more finished steel  production out of his company than was originally produced as hot metal in the blast furnaces.

So blast furnace production was the single most important production indicator that was used to manage the business.

2010 remains above 2009 and 2008 data.

Rail shipments are an equally valid indicator to those of us in manufacturing- raw materials such as iron ore, semi finished products such as steel, and finished goods such as motor vehicles are all a component of the Monthly Carload Report compiled by the Association of American Railroads.

U.S. freight railroads originated an average of 284,407 carloads per week in November 2010, for a total of 1,137,626 carloads for the month.

 That’s up 4.5% over November 2009.

Year-to-date carloads the end of November 2010  were 13.46 million, up 7.1% from the 12.57 million through same time period in 2009.

The following chart shows us just how well the “tangible economy” has come back: 

 

 
November  2010 was the ninth straight month with higher year-over-year average weekly rail carloads  something that hasn’t happened since 2004. I like where we are!

According to the AAR comparing shipments in November 2010 to November 2009,

  • Metallic ores shipments are up 86%;
  • Primary Metal prodyucts (mostly steel) up 26%;
  • Waste and Scrap (largely scrap) up 11.4%.

There are a lot of conflicting and confusing indicators being circulated in the media today. We continue to be a fan of rail shipments as an indicator of the real status of the ‘Tangible Economy’ of manufacturing. Just like the iron production numbers I helped track back in the day,  These rail shipments are a great proxy for manufacturing to come (ore and scrap shipments) and present manufacturing (Motor vehicle and parts shipments) as well as a proxy for the larger economy that is built of the ‘stuff’ carried by rail.

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