May ISM Report: New Orders, Production, Employment Grow
Press release from the issuing company
(Tempe, Arizona) — Economic activity in the manufacturing sector grew in May for the 12th consecutive month, while the overall economy grew for the 31st 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 grew at a faster rate in May, continuing its recent strong performance. The rate of growth in New Orders and Production slowed slightly but was offset by a significant increase in Employment. Employment has not registered this high since April 1973, when it registered 62.6 percent."
ISM's Backlog of Orders Index indicates that order backlogs increased in May, and the Employment Index grew for the seventh consecutive month. ISM's Prices Index indicates that manufacturers once again experienced higher prices in their purchases. The New Export Orders and Import Indexes continue to grow in May.
Comments from respondents indicate demand is strong in most industries, but they also express major concerns about rising materials prices and the cost of energy in particular. A number of respondents mention adding permanent jobs, as well as adding temporary and seasonal workers. While there are mentions of allocation, extended leadtimes and low inventories, it appears that members are able to work through these issues at this time.
ISM's PMI registered 62.8 percent in May, an increase of 0.4 percentage point when compared to 62.4 percent in April. ISM's New Orders Index declined 2.2 percentage points from 65 percent in April to 62.8 percent in May. ISM's Production Index decreased 2.2 percentage points from 67 percent in April to 64.8 percent in May. The ISM Employment Index is at 61.9 percent for May, an increase of 4.1 percentage points when compared to the 57.8 percent reported in April.
ISM's Supplier Deliveries Index registered 69.4 percent, 2.3 percentage points higher than April's 67.1 percent. ISM's Inventories Index registered 49.3 percent in May, up from the 44.8 percent reported in April. ISM's Customers' Inventories Index for May is at 37 percent, a decrease of 3.5 percentage points compared to the April reading of 40.5 percent. ISM's Prices Index in May is 86 percent, 2 percentage points lower than the 88 percent reported in April.
ISM's Backlog of Orders Index decreased 3.5 percentage points, registering 63 percent in May compared to 66.5 percent in April. ISM's New Export Orders Index registered 60.6 percent, a decrease of 0.4 percentage point from April's 61 percent. ISM's Imports Index increased 1.3 percentage points to 59.8 percent in May, up from 58.5 percent in April.
"It appears that second-quarter growth will be very solid, and the momentum should carry over into the second half of the year. 2004 is shaping up as one of the better years for manufacturing. Many respondents indicate that order backlogs are growing for the first time in several years," said Ore.
In May, 19 industries reported growth: Industrial & Commercial Equipment & Computers; Wood & Wood Products; Instruments & Photographic Equipment; Chemicals; Electronic Components & Equipment; Glass, Stone & Aggregate; Textiles; Fabricated Metals; Paper; Furniture; Apparel; Miscellaneous*; Transportation & Equipment; Petroleum; Rubber & Plastic Products; Primary Metals; Leather; Printing & Publishing; and Food.
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