Not the Best of Manufacturing News: PMI at 36.2%
Add comment December 1st, 2008
New Orders, Production, Employment and Inventories Contracting; Prices Falling; Supplier Deliveries Faster
(Tempe, Arizona) — Economic activity in the manufacturing sector failed to grow in November for the fourth consecutive month, and the overall economy contracted for the second consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementâ„¢ Manufacturing Business Survey Committee. “When comparing November to October, the PMI indicates a continuing rapid rate of contraction in manufacturing. New orders have contracted for 12 consecutive months, and are at the lowest level since June 1980 when the index registered 24.2 percent. Order backlogs have fallen to the lowest level since ISM began tracking the Backlog of Orders Index in January 1993. The Prices Index at 25.5 percent indicates that commodity prices continue to decline at a rapid rate. This is the lowest reading for the index since May 1949 when it registered 20.1 percent.”
PERFORMANCE BY INDUSTRY
The two industries reporting growth in November — listed in order — are: Apparel, Leather & Allied Products; and Paper Products. The industries reporting contraction in November are: Nonmetallic Mineral Products; Fabricated Metal Products; Textile Mills; Printing & Related Support Activities; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Transportation Equipment; Furniture & Related Products; Plastics & Rubber Products; Computer & Electronic Products; Chemical Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Wood Products.
WHAT RESPONDENTS ARE SAYING …
- “The only positive thing of late is that the U.S. dollar has strengthened significantly against other currencies. We import the majority of our materials so this will have the effect of lowering our COGS.” (Transportation Equipment)
- “Steel industry is our main customer, and they have had a real slowdown.” (Computer & Electronic Products)
- “Criteria for projects is significantly higher with very short ROI periods.” (Food, Beverage & Tobacco Products)
- “We have revised downward our top-line sales estimates for CY2009 by 8 percent due to the continued softness we see in the housing sector.” (Machinery)
- “Suppliers are trying to hold onto pricing, but petrochemical and commodity prices are dropping like a rock.” (Plastics & Rubber Products)
| MANUFACTURING AT A GLANCE NOVEMBER 2008 |
||||||
|---|---|---|---|---|---|---|
| Index | Series Index November |
Series Index October |
Percentage Point Change |
Direction | Rate of Change |
Trend* (Months) |
| PMI | 36.2 | 38.9 | -2.7 | Contracting | Faster | 4 |
| New Orders | 27.9 | 32.2 | -4.3 | Contracting | Faster | 12 |
| Production | 31.5 | 34.1 | -2.6 | Contracting | Faster | 3 |
| Employment | 34.2 | 34.6 | -0.4 | Contracting | Faster | 4 |
| Supplier Deliveries | 48.4 | 49.2 | -0.8 | Faster | Faster | 2 |
| Inventories | 39.1 | 44.3 | -5.2 | Contracting | Faster | 5 |
| Customers’ Inventories | 55.0 | 55.0 | 0 | Too High | Same | 4 |
| Prices | 25.5 | 37.0 | -11.5 | Decreasing | Faster | 2 |
| Backlog of Orders | 27.0 | 29.5 | -2.5 | Contracting | Faster | 7 |
| Exports | 41.0 | 41.0 | 0 | Contracting | Same | 2 |
| Imports | 37.5 | 41.0 | -3.5 | Contracting | Faster | 10 |
| OVERALL ECONOMY | Contracting | Faster | 2 | |||
| Manufacturing Sector | Contracting | Faster | 4 | |||
*Number of months moving in current direction
See the rest of the report here….http://www.ism.ws/ISMReport/MfgROB.cfm
