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Manufacturing sector failed to grow in November, First time in over 3 years

Monday, December 04, 2006

Press release from the issuing company

Dec 1, 2006 -- Economic activity in the manufacturing sector failed to grow in November for the first time following 41 consecutive months of growth, while the overall economy grew for the 61st 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. "In November, manufacturing activity declined to its lowest level in 42 months as the PMI fell to 49.5 percent. The last time the PMI registered below 50 percent was April 2003 (46.5 percent). New Orders and Production both ended growth cycles at 42 months during November. On the positive side, growth in New Export Orders continued as the weaker dollar continues to fuel that segment." TOP PERFORMING INDUSTRIES The eight industries reporting growth in November — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Primary Metals; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Computer & Electronic Products; Printing & Related Support Activities; and Chemical Products. WHAT RESPONDENTS ARE SAYING ... * "Sales have leveled off, but we will have a record year. Second [year] in a row." (Computer & Electronic Products) * "Business has softened in the past 60 days. Down about 20 percent." (Fabricated Metal Products) * "Housing market slowed down." (Furniture & Related Products) * "We have hit another slow period in receiving new contracts. Quoting activity is fair." (Machinery) * "We are still trying to hire new maintenance techs, but find it difficult to find qualified people." (Nonmetallic Mineral Products) The manufacturing economy failed to grow in November as the PMI registered 49.5 percent, a decrease of 1.7 percentage points when compared to October's reading of 51.2 percent. This is the lowest reading since April 2003 (46.5 percent) when the PMI was last below the 50 percent level. 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 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates that the overall economy is continuing to grow while the manufacturing sector has now entered a period of contraction. "The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (54.1 percent) corresponds to a 4.1 percent increase in real gross domestic product (GDP). In addition, if the PMI for November (49.5 percent) is annualized, it corresponds to a 2.4 percent increase in real GDP annually." New Orders ISM's New Orders Index registered 48.7 percent in November. The index is 3.4 percentage points lower than the 52.1 percent reported in October. November ends a string of 42 consecutive months above 50 percent for this index. 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). Five industries reported increases during November: Apparel, Leather & Allied Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Chemical Products. Production ISM's Production Index registered 48.5 percent in November, 3.4 percentage points lower than the 51.9 percent reported in October. November's contraction ends 42 consecutive months 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 November, eight registered growth: Apparel, Leather & Allied Products; Plastics & Rubber Products; Primary Metals; Printing & Related Support Activities; Computer & Electronic Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Paper Products. Employment ISM's Employment Index registered 49.2 percent in November, a decrease of 1.6 percentage points when compared to October's reading of 50.8 percent. An Employment Index above 48.9 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The six industries reporting growth in employment during November are: Apparel, Leather & Allied Products; Primary Metals; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Paper Products.

 

 

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