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Monday, October 16, 2017
Memory Industry News
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Manufacturing sector continue to grow


Thursday, August 03, 2017

Economic activity in the manufacturing sector expanded in July, and the overall economy grew for the 98th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in July as the PMI registered 56.3 percent, a decrease of 1.5 percentage points from the June reading of 57.8 percent. This indicates growth in manufacturing for the 11th consecutive month and is the fourth highest reading in the last 12 months. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee states, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (56.4 percent) corresponds to a 4.1 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for July (56.3 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually.”

A PMI above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI indicates growth for the 98th consecutive month in the overall economy and the 11th straight month of growth in the manufacturing sector.

Orders, Production and Inventory

ISM’s New Orders Index registered 60.4 percent in July, which is a decrease of 3.1 percentage points when compared to the 63.5 percent reported for June, indicating growth in new orders for the 11th consecutive month.

“Order placements remained strong across most industry sectors in spite of seasonality factors including changes in demand and vacation periods,” says Fiore. A New Orders Index above 52.3 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

ISM’s Production Index registered 60.6 percent in July, which is a decrease of 1.8 percentage points when compared to the 62.4 percent reported for June, indicating growth in production for the 11th consecutive month.

“Production remains at strong growth levels in most industries in spite of supplier delivery constraints and the continued need for additional labor,” adds Fiore. An index above 51.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The Inventories Index registered 50 percent in July, which is an increase of 1 percentage point when compared to the 49 percent reported for June, indicating raw materials inventories saw no change in July compared to June.  An Inventories Index greater than 42.9 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

ISM’s Backlog of Orders Index registered 55 percent in July, a decrease of 2 percentage points from the 57 percent reported for June, indicating growth in order backlogs for the sixth consecutive month. Of the 88 percent of respondents who reported their backlog of orders, 25 percent reported greater backlogs, 15 percent reported smaller backlogs, and 60 percent reported no change from June.

Exports, Imports and Prices

ISM’s New Export Orders Index registered 57.5 percent in July, a decrease of 2 percentage points when compared to the 59.5 percent reported for June, indicating growth in new export orders for the 17th consecutive month.

“Exports continue at a strong pace, with only one industry noting a decrease in export orders,” explains Fiore.

ISM’s Imports Index registered 56 percent in July, an increase of 2 percentage points when compared to the 54 percent reported for June, indicating that imports are growing in July for the sixth consecutive month.

The ISM Prices Index registered 62 percent in July, an increase of 7 percentage points when compared to the June reading of 55 percent, indicating an increase in raw materials prices for the 17th consecutive month. In July, 33 percent of respondents reported paying higher prices, 9 percent reported paying lower prices, and 58 percent of supply executives reported paying the same prices as in June.

“The Business Survey Committee noted price increases in many areas, including metals (steel, aluminum, non-ferrous metals, precious metals); food products, including corn and wheat; electronic components; lumber and wood products; and chemicals, including several types of plastic resins,” comments Fiore

A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Employment

ISM’s Employment Index registered 55.2 percent in July, a decrease of 2 percentage points when compared to the June reading of 57.2 percent. This indicates growth in employment in July for the 10th consecutive month. Employment levels have been expanding since October 2016.

By: DocMemory
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