Positive News and Trends for Manufacturing – ISM Report


Some fantastic positive news was published yesterday by the Institute for Supply Management (ISM) on trends within the Manufacturing Sector. If you aren’t familiar with ISM – it’s a not-for-profit US based association with more than 40,000 members. The ISM serves purchasing and supply management professionals.

Every month since 1998 they publish a report called the Manufacturing Report On Business; the information in the report is gathered from both surveys of their members and global economic facts / trends.

As part of this report – they provide a “Purchasing Manager’s Index” or PMI – The PMI is a composite index of five “sub-indicators” including:

  • Manufacturing Production Levels
  • New Orders (from customers)
  • Supplier Deliveries
  • Inventory
  • Employment Levels

The PMI figure can vary from 0 to 100; a PMI reading of 50 or higher generally indicates the industry is expanding and below 50 means it’s contracting. The rate of change of this reading over time is also important as a reading of 51 coming after a month with a reading of 56 would not be seen favorably – but a reading of 51 after a month <50; the opposite is true.

For August – the PMI was 52.9; the highest value since June 2007; in July the value was 48…a 4 percentage point increase and more importantly – the first greater than 50 rating in 18 months.

In short – it is saying that after a year and half decline in manufacturing – August is showing growth.

According to ISM – the growth was driven by significant strength in NEW ORDERS; which was up 9.6 points to 64.9 percent – the highest total since DECEMBER 2004.

Additionally; the growth appears sustainable as inventories have been reduced for 40 consecutive months and supply chains will have no choice but to re-stock to meet this new demand.

Some great news for us to leverage as marketers to make sure we are in front of what is expected to be a sustainable trend – new orders and increasing searching, sourcing and purchasing across the supply chain!

Link to the ISM report:

http://www.ism.ws/ismreport/mfgrob.cfm

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