November Manufacturing, New Orders Contracting, Inventories Decline
Press release from the issuing company
(Tempe, Arizona) — Economic activity in the manufacturing sector declined for the third consecutive month. The overall economy grew for the 13th 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 failed to grow in November. While the Production Index strengthened, the New Orders Index softened. The PMI has averaged 49.6 percent for the past five months. The sector continues to need drivers that will help end the stagnation."
ISM's Backlog of Orders Index indicates that order backlogs declined for the fifth consecutive month. ISM's Supplier Deliveries Index reflects slower deliveries for the 11th consecutive month. Manufacturing employment continued to decline in November as the index remained below the breakeven point (an index of 50 percent) for the 26th consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the ninth consecutive month. New Export Orders failed to grow in November after 10 consecutive months of growth. November's Imports Index grew following one month of decline.
Comments from purchasing and supply executives indicate that their business is either "flat," "depressed," or in the "doldrums" this month. The dock strike on the West Coast was still on the minds of many as they apparently were taking other measures such as using airfreight or shipping through East Coast ports. The situation with Iraq is another major concern as members felt the uncertainty is a deterrent to business.
ISM's PMI is 49.2 percent in November, an increase of 0.7 percentage point when compared to 48.5 in October. ISM's New Orders Index declined from 50.9 percent in October to 49.9 percent in November. ISM's Production Index rose 5.3 percentage points from 49.3 percent in October to 54.6 percent in November. The ISM Employment Index is at 43.8 percent for November, a decrease of 1.2 percentage points when compared to the 45 percent reported in October.
ISM's Supplier Deliveries Index registered 50.8 percent compared to 52.6 percent in October. ISM's Inventories Index rose to 42.1 percent from 40.2 percent in October. ISM's Customers' Inventories Index for November is at 46.5 percent, an increase of 4 percentage points compared to the October reading of 42.5 percent. ISM's Prices Index in November is 55.7 percent, a decrease of 2.6 percentage points from October's 58.3 percent. ISM's Backlog of Orders Index declined 1 percentage point from 43.5 percent in October to 42.5 percent in November.
ISM's New Export Orders Index registered 49.1 percent, down 5.3 percentage points from October's 54.4 percent. ISM's Imports Index rose from 48.7 percent in October to 53.1 percent in November.
"November's decline in manufacturing was slight when compared to October. The trend is well established that the overall economy is holding up, but the manufacturing sector is feeling the brunt of the downturn. The decline in manufacturing employment is quickening. We are seeing a slowing in the rate of price increases. Overall, there are not really any signs of potential change either upward or downward."
Of the 20 industries in the manufacturing sector, eight industries reported growth: Textiles; Food; Instruments & Photographic Equipment; Tobacco; Rubber & Plastic Products; Chemicals; Printing & Publishing; and Furniture.
"Steel is the only commodity reported in short supply. Commodities reported up in price are: Caustic Soda, Corn, Corrugated Containers, Diesel Fuel, Gasoline, Natural Gas, Nickel, Phenol, Steel and Wheat. Natural Gas and Pork are the only commodities reported down in price," Ore stated.
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