November 2015 Manufacturing ISM® Report On Business®

Dec 08, 2015

Economic activity in the manufacturing sector contracted in November for the first time in 36 months, since November 2012, while the overall economy grew for the 78th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM^® Report On Business^®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee. "The November PMI^® registered 48.6 percent, a decrease of 1.5 percentage points from the October reading of 50.1 percent. The New Orders Index registered 48.9 percent, a decrease of 4 percentage points from the reading of 52.9 percent in October. The Production Index registered 49.2 percent, 3.7 percentage points below the October reading of 52.9 percent. The Employment Index registered 51.3 percent, 3.7 percentage points above the October reading of 47.6 percent. The Prices Index registered 35.5 percent, a decrease of 3.5 percentage points from the October reading of 39 percent, indicating lower raw materials prices for the 13th consecutive month. The New Export Orders Index registered 47.5 percent, unchanged from October, and the Imports Index registered 49 percent, up 2 percentage points from the October reading of 47 percent. Ten out of 18 manufacturing industries reported contraction in November, with lower new orders, production and raw materials inventories accounting for the overall softness in November."

Of the 18 manufacturing industries, five are reporting growth in November in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Transportation Equipment. The 10 industries reporting contraction in November — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Primary Metals; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Furniture & Related Products; Fabricated Metal Products; and Chemical Products.

MANUFACTURING AT A GLANCE NOVEMBER 2015
Index	Series Index Nov	Series Index Oct	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI®	48.6	50.1	-1.5	Contracting	From Growing	1
New Orders	48.9	52.9	-4.0	Contracting	From Growing	1
Production	49.2	52.9	-3.7	Contracting	From Growing	1
Employment	51.3	47.6	+3.7	Growing	From Contracting	1
Supplier Deliveries	50.6	50.4	+0.2	Slowing	Faster	4
Inventories	43.0	46.5	-3.5	Contracting	Faster	5
Customers’ Inventories	50.5	51.0	-0.5	Too High	Slower	4
Prices	35.5	39.0	-3.5	Decreasing	Faster	13
Backlog of Orders	43.0	42.5	+0.5	Contracting	Slower	6
Exports	47.5	47.5	0.0	Contracting	Same	6
Imports	49.0	47.0	+2.0	Contracting	Slower	2
OVERALL ECONOMY				Growing	Slower	78
Manufacturing Sector				Contracting	From Growing	1

Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

 

 

PMI^®

Manufacturing contracted in November as the PMI^® registered 48.6 percent, a decrease of 1.5 percentage points from the October reading of 50.1 percent, indicating contraction in manufacturing for the first time since November 2012 when the PMI^® registered 48.9 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^® above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI^® indicates growth for the 78th consecutive month in the overall economy, while indicating contraction in the manufacturing sector for the first time in 36 months. Holcomb stated, "The past relationship between the PMI^® and the overall economy indicates that the average PMI^® for January through November (51.6 percent) corresponds to a 2.7 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^® for November (48.6 percent) is annualized, it corresponds to a 1.7 percent increase in real GDP annually."

THE LAST 12 MONTHS

Month	PMI®		Month	PMI®
Nov 2015	48.6		May 2015	52.8
Oct 2015	50.1		Apr 2015	51.5
Sep 2015	50.2		Mar 2015	51.5
Aug 2015	51.1		Feb 2015	52.9
Jul 2015	52.7		Jan 2015	53.5
Jun 2015	53.5		Dec 2014	55.1
Average for 12 months – 51.9 High – 55.1 Low – 48.6

 

New Orders

ISM^®’s New Orders Index registered 48.9 percent in November, a decrease of 4 percentage points when compared to the October reading of 52.9 percent, indicating contraction in new orders for the first time since November 2012 when the New Orders Index registered 49.5 percent. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The five industries reporting growth in new orders in November are: Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; and Primary Metals. The eight industries reporting a decrease in new orders during November — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Machinery; Furniture & Related Products; Transportation Equipment; Fabricated Metal Products; and Computer & Electronic Products.

New Orders	% Better	% Same	% Worse	Net	Index
Nov 2015	22	53	25	-3	48.9
Oct 2015	24	53	23	+1	52.9
Sep 2015	22	53	25	-3	50.1
Aug 2015	25	51	24	+1	51.7

 

Production

ISM^®’s Production Index registered 49.2 percent in November, which is a decrease of 3.7 percentage points when compared to the 52.9 percent reported in October, indicating contraction in production for the first time since August 2012 when the Production Index registered 49.1 percent. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The five industries reporting growth in production during the month of November are: Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Furniture & Related Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The seven industries reporting a decrease in production during November — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Machinery; Primary Metals; Plastics & Rubber Products; Transportation Equipment; and Chemical Products. Six industries reported no change in November compared to October.

Production	% Better	% Same	% Worse	Net	Index
Nov 2015	20	57	23	-3	49.2
Oct 2015	23	56	21	+2	52.9
Sep 2015	21	59	20	+1	51.8
Aug 2015	24	57	19	+5	53.6

 

Employment

ISM^®’s Employment Index registered 51.3 percent in November, which is an increase of 3.7 percentage points when compared to the 47.6 percent reported in October, indicating a return to growth in employment following one month of contraction. An Employment Index above 50.6 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, in November, the nine industries reporting employment growth — listed in order — are: Textile Mills; Printing & Related Support Activities; Paper Products; Nonmetallic Mineral Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Miscellaneous Manufacturing. The five industries reporting a decrease in employment in November are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Machinery; and Computer & Electronic Products.

Employment	% Higher	% Same	% Lower	Net	Index
Nov 2015	15	69	16	-1	51.3
Oct 2015	12	68	20	-8	47.6
Sep 2015	17	64	19	-2	50.5
Aug 2015	18	65	17	+1	51.2

  

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