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February Manufacturing ISM Report On Business; PMI at 52.3%

Friday, March 02, 2007

Press release from the issuing company

TEMPE, Ariz.--March 1, 2007-- Economic activity in the manufacturing sector expanded in February following a decline in January, while the overall economy grew for the 64th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business(R). The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management(TM) Manufacturing Business Survey Committee. "February proved to be a good month in the manufacturing sector as New Orders, Production and Employment contributed to a solid growth scenario. The Inventories Index showed significant reduction in manufacturers' inventories for the second consecutive month, and the Backlog of Orders Index is growing once again. While the prices manufacturers pay reached their highest level in five months, concern about prices is still minimal due to the small number of commodities indicated as up in price. The trend in manufacturing, as well as the overall economy, is for slow but continuing growth." TOP PERFORMING INDUSTRIES The 13 industries reporting growth in February -- listed in order -- are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Wood Products; Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; Paper Products; Food, Beverage & Tobacco Products; and Machinery. WHAT RESPONDENTS ARE SAYING ... -- "Business is booming in the fertilizer business." (Chemical Products) -- "Business continues to be strong but flat. Goals were all met for the month except inventory is too high according to budget." (Fabricated Metal Products) -- "Our business has continued at a fairly level pace since September 2006." (Computer & Electronic Products) -- "Although our business is still depressed, we are seeing increased order activity for single pieces of equipment compared to complete system solutions as in the past." (Machinery) -- "Business has slowed a little. Leadtimes for MRO parts are still longer than a year ago." (Nonmetallic Mineral Products) PMI The manufacturing economy returned to growth in February as the PMI registered 52.3 percent, an increase of 3 percentage points when compared to January's seasonally adjusted reading of 49.3 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 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the 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 PMI average for January and February (50.8 percent) corresponds to a 2.8 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for February (52.3) is annualized, it corresponds to a 3.2 percent increase in real GDP annually." New Orders ISM's New Orders Index registered 54.9 percent in February. The index is 4.6 percentage points higher than the seasonally adjusted 50.3 percent reported in January. A New Orders Index above 49.1 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 February: Apparel, Leather & Allied Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Textile Mills; Wood Products; Computer & Electronic Products; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Paper Products. Production ISM's Production Index registered 54.1 percent in February, 4.5 percentage points higher than the seasonally adjusted 49.6 percent reported in January. Manufacturers' production is now growing following a one-month contraction in February. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in February, 11 registered growth: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; Paper Products; Transportation Equipment; Computer & Electronic Products; and Food, Beverage & Tobacco Products. Employment ISM's Employment Index registered 51.1 percent in February as the Index increased 1.6 percentage points when compared to January's seasonally adjusted reading of 49.5 percent. February's Index reverses a three-month trend of contraction in manufacturing employment. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. The eight industries reporting growth in employment during February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Chemical Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Paper Products; Computer & Electronic Products; and Transportation Equipment. Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower for the 44th consecutive month in February. ISM's Supplier Deliveries Index registered 50.8 percent in February, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 52.7 percent. A reading above 50 percent indicates slower deliveries. The six industries reporting slower supplier deliveries in February are: Nonmetallic Mineral Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Chemical Products. Inventories Manufacturers' inventories contracted for the seventh consecutive month in February as ISM's Inventories Index registered 44.6 percent, a 4.7 percentage point increase when compared to January's reading of 39.9 percent (seasonally adjusted). An Inventories Index greater than 42.4 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 seven industries reporting higher inventories in February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Computer & Electronic Products; Furniture & Related Products; Primary Metals; and Machinery. Customers' Inventories(b) The ISM Customers' Inventories Index registered 53 percent in February, 1 percentage point higher than the 52 percent reported in January. The index indicates that respondents believe their customers have more than sufficient inventories on hand (inventories are too high) at this time. This is the fifth month of growth in this index following 64 consecutive months in which the index registered below 50 percent. Eight industries reported higher customers' inventories during February: Furniture & Related Products; Printing & Related Support Activities; Paper Products; Nonmetallic Mineral Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; and Computer & Electronic Products. Prices(b) In February, the ISM Prices Index registered 59 percent, indicating manufacturers are paying higher prices on average when compared to January. While 32 percent of respondents reported paying higher prices and 14 percent reported paying lower prices, 54 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In February, 13 industries reported paying higher prices: Apparel, Leather & Allied Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; Machinery; Chemical Products; and Primary Metals. Backlog of Orders(b) ISM's Backlog of Orders Index registered 51.5 percent, 8 percentage points higher than the 43.5 percent reported in January. The Index indicates manufacturers' order backlogs are now growing after five consecutive months of contraction. Of the 85 percent of respondents who reported their backlog of orders, 26 percent reported greater backlogs, 23 percent reported smaller backlogs, and 51 percent reported no change from January. The 12 industries reporting an increase in order backlogs in February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Textile Mills; Wood Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Paper Products. New Export Orders(b) ISM's New Export Orders Index registered 54 percent in February, an increase of 1.5 percentage points when compared to January's index of 52.5 percent. This is the 51st consecutive month of growth in export orders. The seven industries reporting growth in new export orders in February are: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; and Chemical Products. (Beginning with the January 2007 report, the New Export Orders Index no longer meets the criteria for seasonal adjustment.) Imports(b) Imports of materials by manufacturers grew during February as the Imports Index registered 61.5 percent. The index is seven percentage points higher when compared to January. This is the 62nd consecutive month of growth in import orders. The 11 industries reporting growth in import activity for February are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Chemical Products. (b) The Backlog of Orders, Prices, Customers' Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments.

 

 

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