PERFORMANCE BY INDUSTRY
In December, nine of the 18 manufacturing industries reported growth. The industries — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Transportation Equipment; Paper Products; Furniture & Related Products; and Food, Beverage & Tobacco Products. The seven industries reporting contraction in December — listed in order — are: Wood Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Chemical Products; Printing & Related Support Activities; and Fabricated Metal Products.
WHAT RESPONDENTS ARE SAYING …
- “Capital is tight. The forecast has been lowered for 2010.” (Chemical Products)
- “Nice rebound for our consumer business.” (Nonmetallic Mineral Products)
- “Demand from automotive [manufacturers] remains strong, with some plants not having extended shutdowns during the Christmas holiday.” (Fabricated Metal Products)
- “Still not seeing any increase in production as the economic indicators are suggesting.” (Electrical Equipment, Appliances & Components)
- “Business remains steady and strong.” (Primary Metals)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum (6); Aluminum Products; Copper (7); Copper Based Products (6); Polypropylene; and Steel (6).
Commodities Down in Price
Natural Gas is the only commodity reported down in price.
Commodities in Short Supply
No commodities are reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
DECEMBER 2009 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing growth accelerated in December as the PMI registered 55.9 percent, an increase of 2.3 percentage points when compared to November’s reading of 53.6 percent, indicating continuing recovery in the sector at a faster rate of growth. This is the fifth consecutive month of growth in the manufacturing sector. 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 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the eighth consecutive month in the overall economy, as well as expansion in the manufacturing sector for the fifth consecutive month. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (46.3 percent) corresponds to a 1.6 percent increase in real gross domestic product (GDP). However, if the PMI for December (55.9 percent) is annualized, it corresponds to a 4.6 percent increase in real GDP annually."
New Orders
ISM’s New Orders Index registered 65.5 percent in December, 5.2 percentage points higher than the 60.3 percent registered in November. This is the sixth consecutive month of growth in the New Orders Index. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
The 11 industries reporting growth in new orders in December — listed in order — are: Apparel, Leather & Allied Products; Computer & Electronic Products; Textile Mills; Electrical Equipment, Appliances & Components; Paper Products; Primary Metals; Furniture & Related Products; Food, Beverage & Tobacco Products; Machinery; Transportation Equipment; and Fabricated Metal Products. The four industries reporting decreases in new orders in December are: Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; and Chemical Products.
Production
ISM’s Production Index registered 61.8 percent in December, which is an increase of 1.9 percentage points from the November reading of 59.9 percent. An index above 50.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the seventh consecutive month the Production Index has registered above 50 percent.
The 11 industries reporting growth in production during the month of December — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Primary Metals; Furniture & Related Products; Computer & Electronic Products; Machinery; Paper Products; Transportation Equipment; and Fabricated Metal Products. The five industries reporting decreases in production in December are: Wood Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Nonmetallic Mineral Products; and Chemical Products.
Employment
ISM’s Employment Index registered 52 percent in December, which is 1.2 percentage points higher than the 50.8 percent reported in November. This is the third month of growth in manufacturing employment, following 14 consecutive months of decline. An Employment Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Seven of the 18 manufacturing industries reported growth in employment in December in the following order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Paper Products; Transportation Equipment; Machinery; and Electrical Equipment, Appliances & Components. The eight industries that reported decreases in employment during December — listed in order — are: Wood Products; Textile Mills; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; and Fabricated Metal Products.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in December as the Supplier Deliveries Index registered 56.6 percent, which is 0.9 percentage point higher than the 55.7 percent registered in November. This is the seventh consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.
The five industries reporting slower supplier deliveries in December are: Petroleum & Coal Products; Computer & Electronic Products; Machinery; Transportation Equipment; and Electrical Equipment, Appliances & Components. The two industries reporting faster deliveries in December are: Primary Metals; and Food, Beverage & Tobacco Products.
Inventories
Manufacturers’ inventories contracted at a slower rate in December as the Inventories Index registered 43.4 percent. The index is 2.1 percentage points higher than the November reading of 41.3 percent. 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; Petroleum & Coal Products; Plastics & Rubber Products; Transportation Equipment; Machinery; and Computer & Electronic Products. The nine industries that reported decreases in inventories in December — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Textile Mills; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; Chemical Products; and Food, Beverage & Tobacco Products.
Customers’ Inventories(b)
The ISM Customers’ Inventories Index registered 35 percent in December, which is slightly lower than in November when the index registered 37 percent. The index indicates that respondents believe their customers’ inventories are too low at this time. This is the ninth consecutive month the Customers’ Inventories Index has been below 50 percent.
Furniture & Related Products is the only industry reporting higher customers’ inventories during December. The 13 industries that reported lower customers’ inventories during December — listed in order — are: Wood Products; Machinery; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Primary Metals; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; and Fabricated Metal Products.
Prices(b)
The ISM Prices Index registered 61.5 percent in December, 6.5 percentage points higher than the 55 percent reported in November. This is the sixth consecutive month that the Prices Index has registered above 50 percent. While 32 percent of respondents reported paying higher prices and 9 percent reported paying lower prices, 59 percent of supply executives reported paying the same prices as in November. A Prices Index above 47.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
The 12 industries reporting paying increased prices during the month of December — listed in order — are: Petroleum & Coal Products; Plastics & Rubber Products; Primary Metals; Textile Mills; Paper Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Fabricated Metal Products. Nonmetallic Mineral Products and Chemical Products are the only industries that reported paying lower prices during December.
Backlog of Orders(b)
ISM’s Backlog of Orders Index registered 50 percent in December, 2 percentage points lower than the 52 percent reported in November. Of the 86 percent of respondents who reported their backlog of orders, 24 percent reported greater backlogs, 24 percent reported smaller backlogs, and 52 percent reported no change from November.
The nine industries reporting increased order backlogs in December — listed in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Primary Metals; Furniture & Related Products; Paper Products; and Machinery. The six industries that reported decreases in order backlogs during December — listed in order — are: Printing & Related Support Activities; Wood Products; Miscellaneous Manufacturing; Fabricated Metal Products; Chemical Products; and Transportation Equipment.
New Export Orders(b)
ISM’s New Export Orders Index registered 54.5 percent in December, 1.5 percentage points lower than the 56 percent reported in November. This is the sixth consecutive month of growth in the New Export Orders Index, following nine consecutive months of contraction.
The seven industries reporting growth in new export orders in December — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. The three industries reporting decreases in new export orders in December are: Miscellaneous Manufacturing; Transportation Equipment; and Chemical Products.
Imports(b)
Imports of materials by manufacturers expanded in December as the Imports Index registered 55 percent, 3.5 percentage points higher than the 51.5 percent reported in November.
The eight industries reporting growth in imports during the month of December — listed in order — are: Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Machinery; Paper Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Fabricated Metal Products. The four industries that reported decreases in imports in December are: Petroleum & Coal Products; Miscellaneous Manufacturing; Chemical Products; and Food, Beverage & Tobacco Products.
Buying Policy
Average commitment lead time for Capital Expenditures increased 8 days to 110 days. Average lead time for Production Materials increased 2 days to 51 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 1 day to 21 days.
