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December Manufacturing ISM Report On Business: PMI at 58.6%

Wednesday, January 12, 2005

Press release from the issuing company

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in December for the 19th consecutive month, while the overall economy grew for the 38th 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. "December's PMI, driven by a significant increase in the New Orders Index, is very encouraging as growth has accelerated for the second consecutive month. This completes a strong year for manufacturing based on the ISM data, as the overall index averaged above 60 percent for 2004. While there is continuing upward pressure on prices, the rate of increase is slowing and definitely trending in the right direction." Comments from respondents this month focused on inflation, margins and seasonal issues. While many manufacturers are enjoying strong sales, there is concern that inflation is taking its toll on margins, thus reducing profits. While energy and basic commodities are the drivers behind the higher prices, the responses this month show signs of a peak in some commodities. ISM's PMI registered 58.6 percent in December, an increase of 0.8 percentage point when compared to 57.8 percent in November. ISM's New Orders Index rose 5.9 percentage points from 61.5 percent in November to 67.4 percent in December. ISM's Production Index decreased 0.1 percentage point from 57 percent in November to 56.9 percent in December. The ISM Employment Index is at 52.7 percent for December, a decrease of 4.9 percentage points when compared to the 57.6 percent reported in November. ISM's Supplier Deliveries Index registered 54.9 percent, 1.6 percentage points lower than November's 56.5 percent. ISM's Inventories Index registered 53.4 percent in December, up from 50.7 percent reported in November. ISM's Customers' Inventories Index for December is at 44 percent, up from 43.5 in November. ISM's Prices Index in December is 72 percent, 2 percentage points lower than the 74 percent reported in November. ISM's Backlog of Orders Index for December rose 6.5 percentage points to 54 percent from 47.5 percent registered in November. ISM's New Export Orders Index registered 60 percent, an increase of 5.3 percentage points from November's 54.7 percent. ISM's Imports Index increased 2.7 percentage points to 61.1 percent in December, up from 58.4 percent in November. "December continued a trend of strong growth in the manufacturing sector as 2004 closes with significant momentum going into the first quarter of 2005. The sector struggles with inflationary pressures, but strong demand is a consolation. Manufacturing inventories have grown in five of the last seven months; however, those respondents increasing their inventories indicate that current and expected demand requires higher inventory levels," said Ore. In December, 14 industries reported growth: Leather; Industrial & Commercial Equipment & Computers; Furniture; Food; Instruments & Photographic Equipment; Transportation & Equipment; Primary Metals; Miscellaneous*; Chemicals; Rubber & Plastic Products; Electronic Components & Equipment; Apparel; Textiles; and Printing & Publishing. "Alloy Steel; Aluminum; Aluminum Products; Butadiene; Caustic Soda; Chemicals; Copper; Corrugated Containers; Dairy; Diesel Fuel; Energy; Freight; High Density Polyethylene; Low Density Polyethylene; Natural Gas (also reported down in price); Packaging; Paper; PET; Plastic Molding Resins; Plastic Products; Plastics; Polyethylene; Polypropylene; Propylene; Pulp; Resins; Rubber-Based Products; Stainless Steel; Stainless Steel Products (various forms); Steel (also reported down in price); Steel Products (various forms); and Vinyls are the commodities reported up in price. The commodities reported down in price are Fuel (also reported up in price); Gasoline; Natural Gas (also reported up in price) and Steel (also reported up in price). The commodities listed in short supply are Caustic Soda; Resins; Stainless Steel; and Steel," Ore stated.




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