PERFORMANCE BY INDUSTRY
Of the 18 manufacturing industries, 11 are reporting growth in December, in the following order: Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Textile Mills; Plastics & Rubber Products; Transportation Equipment; Electrical Equipment, Appliances & Components; and Chemical Products. The four industries reporting contraction in December are: Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; and Miscellaneous Manufacturing.
WHAT RESPONDENTS ARE SAYING …
- “Company outlook looks positive into 2011. Solid revenue growth across the globe driven by strong volume in Q3 and Q4 2010.” (Chemical Products)
- “We continue to see strong demand for our product in Europe and Asia.” (Electrical Equipment, Appliances & Components)
- “The end of the year is surprisingly busy.” (Computer & Electronic Products)
- “Business remains slow, while vendors clamor for increases that should have no foundation in economics.” (Nonmetallic Mineral Products)
- “Strong pressure still exists on raw material prices in almost every area. It is unclear as to whether they can get them.” (Plastics & Rubber Products)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum (4); Brass; Caustic Soda (5); Chemicals (3); Copper (5); Copper Based Products (2); Corn (4); Corrugated Containers (10); Diesel; Electronic Components; Gasoline; High Density Polyethylene; Natural Gas(b); Nickel (2); PET; Plastic Resins (2); Polyester; Polyethylene (4); Resins (2); Soybean Oil (2); Stainless Steel (2); Starch; Steel (4); Steel Products; Sulfur; Tin Plate; Titanium Dioxide (2); and Wheat.
Commodities Down in Price
Natural Gas(b) (2) is the only commodity reported down in price.
Commodities in Short Supply
Cocoa Powder (4) is the only commodity reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
(b) Reported as both up and down in price.
DECEMBER 2010 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing continued to grow in December as the PMI registered 57 percent, an increase of 0.4 percentage point when compared to November’s reading of 56.6 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 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 20th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 17th consecutive month. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (57.3 percent) corresponds to a 5.1 percent increase in real gross domestic product (GDP). In addition, if the PMI for December (57 percent) is annualized, it corresponds to a 5 percent increase in real GDP annually."
New Orders
ISM’s New Orders Index registered 60.9 percent in December, which is an increase of 4.3 percentage points when compared to the 56.6 percent reported in November. This is the 18th consecutive month of growth in the New Orders Index. A New Orders Index above 50.2 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
The 10 industries reporting growth in new orders in December — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Transportation Equipment. The four industries reporting decreases in new orders in December are: Nonmetallic Mineral Products; Paper Products; Chemical Products; and Printing & Related Support Activities.
Production
ISM’s Production Index registered 60.7 percent in December, which is an increase of 5.7 percentage points from the November reading of 55 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the 19th consecutive month the Production Index has registered above 50 percent.
The nine industries reporting growth in production during the month of December — listed in order — are: Apparel, Leather & Allied Products; Computer & Electronic Products; Primary Metals; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery; Transportation Equipment; and Chemical Products. The six industries reporting a decrease in production in December — listed in order — are: Nonmetallic Mineral Products; Paper Products; Textile Mills; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Printing & Related Support Activities.
Employment
ISM’s Employment Index registered 55.7 percent in December, which is 1.8 percentage points lower than the 57.5 percent reported in November. This is the 13th consecutive month of growth in manufacturing employment. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Of the 18 manufacturing industries, nine reported growth in employment in December in the following order: Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; and Paper Products. The five industries reporting a decrease in employment during December are: Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Printing & Related Support Activities; and Textile Mills.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in December as the Supplier Deliveries Index registered 55.9 percent, which is 1.3 percentage points lower than the 57.2 percent registered in November. This is the 19th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.
The eight industries reporting slower supplier deliveries in December — listed in order — are: Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Machinery; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; and Transportation Equipment. The two industries reporting faster deliveries in December are: Printing & Related Support Activities; and Computer & Electronic Products.
Inventories
Manufacturers’ inventories grew for the sixth consecutive month in December, but at a slower rate as the Inventories Index registered 51.8 percent. The index is 4.9 percentage points lower than the 56.7 percent reported in November. An Inventories Index greater than 42.6 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 six industries reporting higher inventories in December — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical Products. The eight industries reporting decreases in inventories in December — listed in order — are: Nonmetallic Mineral Products; Furniture & Related Products; Printing & Related Support Activities; Paper Products; Miscellaneous Manufacturing; Transportation Equipment; Primary Metals; and Plastics & Rubber Products.
Customers’ Inventories(c)
The ISM Customers’ Inventories Index registered 40 percent in December, 5.5 percentage points lower than in November when the index registered 45.5 percent. This is the 21st consecutive month the Customers’ Inventories Index has been below 50 percent, indicating that respondents believe their customers’ inventories are too low at this time.
The two manufacturing industries reporting customers’ inventories as being too high during December are: Textile Mills and Miscellaneous Manufacturing. The 11 industries reporting customers’ inventories as too low during December — listed in order — are: Printing & Related Support Activities; Machinery; Plastics & Rubber Products; Computer & Electronic Products; Primary Metals; Chemical Products; Nonmetallic Mineral Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Fabricated Metal Products.
Prices(c)
The ISM Prices Index registered 72.5 percent in December, 3 percentage points higher than the 69.5 percent reported in November. This is the 18th consecutive month the Prices Index has registered above 50 percent. While 48 percent of respondents reported paying higher prices and 3 percent reported paying lower prices, 49 percent of supply executives reported paying the same prices as in November. A Prices Index above 49.3 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
The 14 industries reporting paying increased prices during the month of December — listed in order — are: Plastics & Rubber Products; Paper Products; Printing & Related Support Activities; Primary Metals; Chemical Products; Textile Mills; Food, Beverage & Tobacco Products; Transportation Equipment; Machinery; Fabricated Metal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components. None of the 18 manufacturing industries reported paying lower prices on average during December.
Backlog of Orders(c)
ISM’s Backlog of Orders Index registered 47 percent in December, which is 1 percentage point higher than the 46 percent reported in November. Of the 84 percent of respondents who reported their backlog of orders, 21 percent reported greater backlogs, 27 percent reported smaller backlogs, and 52 percent reported no change from November.
The six industries reporting increased order backlogs in December — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Transportation Equipment. The six industries reporting decreases in order backlogs during December — listed in order — are: Paper Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Chemical Products; Fabricated Metal Products; and Machinery.
New Export Orders(c)
ISM’s New Export Orders Index registered 54.5 percent in December, which is 2.5 percentage points lower than the 57 percent reported in November. This is the 18th consecutive month of growth in the New Export Orders Index.
The eight industries reporting growth in new export orders in December — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Machinery; Transportation Equipment; and Chemical Products. The four manufacturing industries reporting a decrease in export orders during December are: Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; and Computer & Electronic Products.
Imports(c)
Imports of materials by manufacturers continued to expand in December as the Imports Index registered 50.5 percent, which is 2.5 percentage points lower than the 53 percent reported in November. This is the 16th consecutive month of growth in imports.
The six industries reporting growth in imports during the month of December — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Transportation Equipment; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. The six industries reporting a decrease in imports during December — listed in order — are: Nonmetallic Mineral Products; Paper Products; Textile Mills; Computer & Electronic Products; Chemical Products; and Food, Beverage & Tobacco Products.
Buying Policy
Average commitment lead time for Capital Expenditures increased 4 days to 105 days. Average lead time for Production Materials decreased 1 day to 52 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 6 days to 28 days.
