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September Manufacturing ISM Report On Business: PMI at 59.4%

Thursday, October 06, 2005

Press release from the issuing company

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in September for the 28th consecutive month, while the overall economy grew for the 47th 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. "The manufacturing sector grew for the 28th consecutive month in September based on the ISM data. The PMI made a strong move to the upside as New Orders and Production rose significantly. This move was supported by slower deliveries and growing order backlogs. While energy prices and the impact from Hurricane Katrina are major concerns, the manufacturing sector has regained significant momentum." TOP PERFORMING INDUSTRIES The 16 industries reporting growth in September — listed in order — are: Paper; Wood & Wood Products; Electronic Components & Equipment; Apparel; Tobacco; Furniture; Chemicals; Instruments & Photographic Equipment; Transportation & Equipment; Food; Primary Metals; Textiles; Rubber & Plastic Products; Fabricated Metals; Printing & Publishing; and Industrial & Commercial Equipment & Computers. WHAT RESPONDENTS ARE SAYING … "Hurricane Katrina has presented some real challenges in getting raw materials, some of which are manufactured in the region and others that are transported through the port of New Orleans." (Chemicals) "Record sales in August 2005 and increased backlog. Expect increased orders from the rebuilding." (Electronic Components & Equipment) "Business levels remain slightly stronger than projected — both domestic and international demand." (Industrial & Commercial Equipment & Computers) "Hurricane Katrina clean-up and reconstruction will have a huge impact on our business. Customer orders have begun to increase substantially." (Instruments & Photographic Equipment ) "Due to demand in the automotive marketplace, business conditions are very strong." (Textiles) COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY Commodities Up in Price Adhesives; Aluminum (2); Aluminum Products (2); Caustic Soda (17); Chemicals (20); Copper (4); Crude Oil (2); Diesel Fuel (13); Energy (8); Freight; Fuel (2); Fuel Oil; Fuel Surcharges (3); Gasoline (3); Natural Gas (38); Oil (5); PET; Petrochemicals; Petroleum-Based Raw Materials; Plastic Resins (8); Plastics (14); Plywood; Propylene; Resins (3); Steel* (24); Transportation; and Yeast. Commodities Down in Price Corrugated Containers (4); Linerboard; Steel* (7); and Wheat. Commodities in Short Supply Castings; Fuel Oil; Hydrochloric Acid (2); Hydrogen; and Resins. *Reported as both up and down in price. Note: The number of consecutive months the commodity is listed is indicated after each item. SEPTEMBER 2005 MANUFACTURING INDEX SUMMARIES PMI The PMI indicates that the manufacturing economy grew in September for the 28th consecutive month. The PMI for September registered 59.4 percent, an increase of 5.8 percentage points when compared to August's reading of 53.6 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 42.7 percent, over a period of time, generally indicates an expansion of the overall economy. The September PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (55 percent) corresponds to a 4.5 percent increase in gross domestic product (GDP) on an annual basis. In addition, if the PMI for September (59.4 percent) is annualized, it corresponds to a 6.1 percent increase in GDP annually. New Orders ISM's New Orders Index grew in September with a reading of 63.8 percent. The index is 7.4 percentage points higher than the 56.4 percent registered in August, and September is the 29th consecutive month the index has exceeded 50 percent. A New Orders Index above 51.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars). Thirteen industries reported increases during September: Paper; Apparel; Wood & Wood Products; Electronic Components & Equipment; Furniture; Food; Chemicals; Printing & Publishing; Transportation & Equipment; Rubber & Plastic Products; Primary Metals; Instruments & Photographic Equipment; and Fabricated Metals. Production ISM's Production Index is 63.1 percent in September, 7.2 percentage points higher than the 55.9 percent reported in August. September is the 29th consecutive month of growth in the index. An index above 50 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in September, 15 registered growth: Tobacco; Paper; Electronic Components & Equipment; Apparel; Instruments & Photographic Equipment; Wood & Wood Products; Chemicals; Primary Metals; Food; Textiles; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Furniture; Printing & Publishing; and Fabricated Metals. Employment ISM's Employment Index registered growth in September for the third consecutive month. The index registered 53.1 percent in September compared to 52.6 percent in August, an increase of 0.5 percentage point. An Employment Index above 48.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The nine industries reporting growth in employment during September are: Furniture; Instruments & Photographic Equipment; Miscellaneous*; Electronic Components & Equipment; Transportation & Equipment; Wood & Wood Products; Food; Primary Metals; and Fabricated Metals. Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower for the 27th consecutive month in September. ISM's Supplier Deliveries Index for September registered 59.3 percent, an increase of 8.8 percentage points when compared to August's reading of 50.5 percent. A reading above 50 percent indicates slower deliveries. The 12 industries reporting slower supplier deliveries in September are: Textiles; Rubber & Plastic Products; Chemicals; Wood & Wood Products; Furniture; Paper; Fabricated Metals; Food; Primary Metals; Industrial & Commercial Equipment & Computers; Transportation & Equipment; and Printing & Publishing. Inventories Manufacturers' inventories declined in September for the sixth consecutive month as ISM's Inventories Index registered 49.6 percent, indicating a faster rate of liquidation when compared to August. An Inventories Index greater than 42.3 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars). The five industries reporting higher inventories in September are: Rubber & Plastic Products; Paper; Transportation & Equipment; Industrial & Commercial Equipment & Computers; and Printing & Publishing. Customers' Inventories The September Customers' Inventories Index is at 44.5 percent, 2 percentage points lower than the 46.5 percent reported in August. Respondents indicate that their customers do not have sufficient inventories on hand (inventories are too low) at this time. This is the 52nd consecutive month that the index has registered below 50 percent. Four industries reported higher customers' inventories during September and they are: Furniture; Paper; Chemicals; and Rubber & Plastic Products. Prices The ISM's Prices Index jumped again in September as the Prices Index rose to 78 percent, up from 62.5 percent in August. September's jump of 15.5 percentage points follows a jump of 14 percentage points from July to August. In September, 60 percent of supply executives reported paying higher prices and 4 percent reported paying lower prices, while 36 percent reported that prices were unchanged from the preceding month. A Prices Index above 47.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In September, 18 industries reported paying higher prices: Tobacco; Petroleum; Glass, Stone & Aggregate; Primary Metals; Chemicals; Rubber & Plastic Products; Fabricated Metals; Paper; Transportation & Equipment; Food; Apparel; Printing & Publishing; Industrial & Commercial Equipment & Computers; Instruments & Photographic Equipment; Wood & Wood Products; Electronic Components & Equipment; Textiles; and Furniture. Backlog of Orders ISM's Backlog of Orders Index registered 55 percent, indicating manufacturers' backlogs in September are growing when compared to August. This represents a 4.5 percentage point increase compared to the 50.5 percent reported in August. Of the 85 percent of respondents who report their backlog of orders, 28 percent reported greater backlogs, 18 percent reported smaller backlogs, and 54 percent reported no change from August. The 11 industries reporting an increase in order backlogs during the month are: Wood & Wood Products; Apparel; Paper; Electronic Components & Equipment; Printing & Publishing; Primary Metals; Food; Fabricated Metals; Furniture; Chemicals; and Rubber & Plastic Products. New Export Orders ISM's New Export Orders Index for September registered 56.9 percent, an increase of 3.6 percentage points when compared to August's index of 53.3 percent. This is the 45th consecutive month of growth in export orders. The 11 industries reporting growth in new export orders in September are: Electronic Components & Equipment; Instruments & Photographic Equipment; Textiles; Primary Metals; Food; Furniture; Paper; Industrial & Commercial Equipment & Computers; Fabricated Metals; Transportation & Equipment; and Chemicals. Imports Imports of materials by manufacturers grew during September as the Imports Index registered 53.4 percent. The index also registered 53.4 percent in August, indicating that imports are growing compared to last month but at the same rate. The 10 industries reporting growth in import activity for September are: Wood & Wood Products; Electronic Components & Equipment; Miscellaneous*; Transportation & Equipment; Furniture; Primary Metals; Fabricated Metals; Paper; Instruments & Photographic Equipment; and Chemicals.




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