December Manufacturing Report On Business: New Orders, Production Growing
Monday, January 06, 2003
(Tempe, Arizona) — Economic activity in the manufacturing sector grew for the first time in four months. The overall economy grew for the 14th 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 Management™ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector rebounded in December. A strong showing in New Orders drove the PMI upward, while the Production Index strengthened and helped push the PMI up by 5.5 percentage points. The question at this point is whether the manufacturing sector can continue to gather momentum during the first quarter of 2003." ISM's Backlog of Orders Index indicates that order backlogs declined for the sixth consecutive month. ISM's Supplier Deliveries Index reflects slower deliveries for the 12th consecutive month. Manufacturing employment continued to decline in December as the index remained below the breakeven point (an index of 50 percent) for the 27th consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the 10th consecutive month. New Export Orders grew in December after a one-month decline. December's Imports Index grew for the second consecutive month. Comments from purchasing and supply executives in some instances indicate improvement in new orders during December. But, there are still those who see little if any improvement in their business. The situation with Iraq appears to still be weighing on some. The uncertainty remains a deterrent to business. ISM's PMI is 54.7 percent in December, an increase of 5.5 percentage points when compared to 49.2 in November. ISM's New Orders Index rose from 49.9 percent in November to 63.3 percent in December. ISM's Production Index rose 1 percentage point from 54.6 percent in November to 55.6 percent in December. The ISM Employment Index is at 47.4 percent for December, an increase of 3.6 percentage points when compared to the 43.8 percent reported in November. ISM's Supplier Deliveries Index registered 51.4 percent compared to 50.8 percent in November. ISM's Inventories Index rose to 46.2 percent from 42.1 percent in November. ISM's Customers' Inventories Index for December is at 43 percent, a decrease of 3.5 percentage points compared to the November reading of 46.5 percent. ISM's Prices Index in December is 56.9 percent, an increase of 1.2 percentage points from November's 55.7 percent. ISM's Backlog of Orders Index rose 4 percentage points from 42.5 percent in November to 46.5 percent in December. ISM's New Export Orders Index registered 52.2 percent, up 3.1 percentage points from November's 49.1 percent. ISM's Imports Index rose from 53.1 percent in November to 55.3 percent in December. "Overall, these positive signs may help provide momentum for Q1 as companies start to see some improvement. The magnitude of the improvement is somewhat difficult to explain at this point. One respondent mentioned the mid-week holiday as a motivator for customers to place increased orders to cover their needs." Of the 20 industries in the manufacturing sector, 11 industries reported growth: Food; Leather; Instruments & Photographic Equipment; Printing & Publishing; Textiles; Furniture; Electronic Components & Equipment; Paper; Wood & Wood Products; Transportation & Equipment; and Chemicals. "There were no reports of commodities in short supply. Commodities reported up in price are: Caustic Soda, Copper, Corrugated Containers, Hydrochloric Acid, Natural Gas, Paper, and Polyethylene. Steel is the only commodity reported down in price," Ore stated.