PERFORMANCE BY INDUSTRY
In December, none of the manufacturing industries reported growth. The industries reporting contraction in December - listed in order - are: Nonmetallic Mineral Products; Wood Products; Fabricated Metal Products; Printing & Related Support Activities; Textile Mills; Plastics & Rubber Products; Paper Products; Transportation Equipment; Machinery; Primary Metals; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Furniture & Related Products. Two industries reported no change in activity compared to last month: Apparel, Leather & Allied Products; and Petroleum & Coal Products.
WHAT RESPONDENTS ARE SAYING …
- “Slowest month in years.” (Chemical Products)
- “Soft economy continues to decrease sales volume and price.” (Fabricated Metal Products)
- “Business remains steady and sales are good.” (Computer & Electronic Products)
- “North and South America are slow but not off substantially from plans. Europe has slowed down dramatically, while Asia - particularly China - has virtually shut down.” (Machinery)
- “Power generation industry is still strong, but there is an unsettled feeling because of the general economy.” (Transportation Equipment)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum(b); Caustic Soda (10); Copper(b) (3); and Steel(b).
Commodities Down in Price
Aluminum(b) (3); Aluminum Based Products (2); Beef; Chemicals; Copper(b) (5); Corn; Corn Products; Diesel Fuel (5); Fuel Surcharges; Gasoline (2); High Density Polyethylene; Natural Gas (5); Nickel (3); Oil; Plastics; Plastic Resin; Polyethylene (2); Polypropylene (3); PVC; Resin Based Products (2); Scrap Metal; Scrap Steel (2); Stainless Steel (3); Stainless Steel Products; Steel(b) (4); and Sulfuric Acid (2).
Commodities in Short Supply
No commodities reported in short supply.
(b) Reported as both up and down in price
DECEMBER 2008 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing contracted in December as the PMI registered 32.4 percent, 3.8 percentage points lower than the 36.2 percent reported in November. This is the lowest reading since June 1980 when the PMI registered 30.3 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 41.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates contraction in both the overall economy and the manufacturing sector. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (45.6 percent) corresponds to a 1.4 percent increase in real gross domestic product (GDP). In addition, if the PMI for December (32.4 percent) is annualized, it corresponds to a 2.7 percent decrease in real GDP annually."
New Orders
ISM’s New Orders Index registered 22.7 percent in December, 5.2 percentage points lower than the 27.9 percent registered in November. This is the lowest reading on record for this index going back to January 1948. A New Orders Index above 51.6 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
In December, none of the 18 manufacturing industries reported growth in new orders. The industries failing to grow in December are: Nonmetallic Mineral Products; Printing & Related Support Activities; Wood Products; Machinery; Primary Metals; Paper Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Plastics & Rubber Products; Textile Mills; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.
Production
ISM’s Production Index decreased to 25.5 percent in December, a decrease of 6 percentage points from the 31.5 percent reported in November. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
None of the industries reported growth in production during the month of December. The industries failing to grow in December are: Nonmetallic Mineral Products; Wood Products; Textile Mills; Transportation Equipment; Fabricated Metal Products; Paper Products; Chemical Products; Machinery; Miscellaneous Manufacturing; Primary Metals; Plastics & Rubber Products; Printing & Related Support Activities; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components.
Employment
ISM’s Employment Index registered 29.9 percent in December, which is a decrease of 4.3 percentage points when compared to the 34.2 percent reported in November. This is the lowest reading for the Employment Index since November 1982 when the index registered 28.2 percent. An Employment Index above 49.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
There were no industries reporting growth in employment during December. The industries that reported decreases in employment during December are: Nonmetallic Mineral Products; Printing & Related Support Activities; Wood Products; Fabricated Metal Products; Miscellaneous Manufacturing; Furniture & Related Products; Electrical Equipment, Appliances & Components; Primary Metals; Plastics & Rubber Products; Paper Products; Textile Mills; Transportation Equipment; Machinery; Computer & Electronic Products; Chemical Products; and Food, Beverage & Tobacco Products.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was faster for the third consecutive month in December as the Supplier Deliveries Index registered 44.9 percent, which is 3.5 percentage points lower than the 48.4 percent registered in November. A reading above 50 percent indicates slower deliveries.
The three industries reporting slower supplier deliveries in December are: Primary Metals; Transportation Equipment; and Machinery. The industries reporting faster deliveries in December are: Nonmetallic Mineral Products; Computer & Electronic Products; Printing & Related Support Activities; Wood Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Product
Inventories
Manufacturers’ inventories contracted in December as the Inventories Index registered 38.8 percent, which is 0.3 percentage point lower than the 39.1 percent reported in November. 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 two industries reporting higher inventories in December are: Furniture & Related Products; and Wood Products. The industries that reported decreases in December are: Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Textile Mills; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Machinery; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.
Customers’ Inventories(c)
The ISM Customers’ Inventories Index registered 57 percent in December, 2 percentage points higher than the 55 percent reported in November. The index indicates that respondents believe their customers’ inventories are too high at this time.
Nine industries reported higher customers’ inventories during December: Machinery; Textile Mills; Wood Products; Primary Metals; Furniture & Related Products; Printing & Related Support Activities; Fabricated Metal Products; Chemical Products; and Food, Beverage & Tobacco Products. The industries that reported lower customers’ inventories during December are: Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; and Transportation Equipment.
Prices(c)
The ISM Prices Index registered 18 percent in December compared to 25.5 percent in November, indicating manufacturers are paying lower prices on average when compared to November. This is the lowest reading for the index since June 1949 when it registered 10.6 percent. While 2 percent of respondents reported paying higher prices and 66 percent reported paying lower prices, 32 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
In December, none of the 18 manufacturing industries reported paying higher prices. The industries that reported paying lower prices during December are: Petroleum & Coal Products; Machinery; Fabricated Metal Products; Primary Metals; Nonmetallic Mineral Products; Paper Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Printing & Related Support Activities; Wood Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Textile Mills; Furniture & Related Products; and Computer & Electronic Products.
Backlog of Orders(c)
ISM’s Backlog of Orders Index registered 23 percent in December, 4 percentage points lower than the 27 percent reported in November. Of the 86 percent of respondents who reported their backlog of orders, 5 percent reported greater backlogs, 59 percent reported smaller backlogs, and 36 percent reported no change from November.
The only industry reporting an increase in order backlogs in December is Apparel, Leather & Allied Products. The industries that reported decreases in order backlogs during December are: Nonmetallic Mineral Products; Printing & Related Support Activities; Paper Products; Transportation Equipment; Wood Products; Machinery; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Furniture & Related Products; Primary Metals; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
New Export Orders(c)
ISM’s New Export Orders Index registered 35.5 percent in December, 5.5 percentage points lower than the 41 percent reported in November. This is the third month of contraction following 70 consecutive months of growth in the New Export Orders Index.
The four industries reporting growth in new export orders in December are: Apparel, Leather & Allied Products; Textile Mills; Plastics & Rubber Products; and Miscellaneous Manufacturing. The industries that reported decreases in new export orders in December are: Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; Chemical Products; Transportation Equipment; Fabricated Metal Products; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Food, Beverage & Tobacco Products.
Imports(c)
Imports of materials by manufacturers contracted during December as the Imports Index registered 39 percent, 1.5 percentage points higher than the 37.5 percent reported in November. This is the 11th consecutive month of contraction in imports.
The industries reporting growth in import activity for December are: Apparel, Leather & Allied Products; Paper Products; and Electrical Equipment, Appliances & Components. The industries that reported decreases in imports during December are: Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Printing & Related Support Activities; Textile Mills; Fabricated Metal Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
(c) The Backlog of Orders, Prices, Customers’ Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments.
Buying Policy
Average commitment lead time for Capital Expenditures decreased 5 days to 101 days. Average lead time for Production Materials decreased 1 day to 47 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 2 days to 23 days.
