ISM report shows manufacturing slowly grows

Manufacturing expanded for the 27th consecutive month based on economic activity, according to the latest ISM report. The economy overall grew for the 29th consecutive month.


It wasn’t the growth that manufacturing would like to see, but the October report on manufacturing sector growth continues to indicate a slow, steady climb out of the depths of the 2009 recession.

Economic activity in the manufacturing sector expanded in October for the 27th consecutive month, and the overall economy grew for the 29th consecutive month, according to the latest Manufacturing ISM Report on Business.

The report was issued on Nov. 1, 2011 by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “The PMI registered 50.8%, a decrease of 0.8 percentage point from September’s reading of 51.6%, indicating expansion in the manufacturing sector for the 27th consecutive month.”

The growth in the manufacturing sector has slid back toward the 50% reading, which is the threshold for growth, according to ISM. The manufacturing sector has grown significantly since dropping below 30% at the height of the recession and begin as high as 61.4% in February 2011.

“The New Orders Index increased 2.8 percentage points from September to 52.4%, indicating a return to growth after three months of contraction,” said Holcomb. “The Prices Index, at 41%, dropped 15 percentage points, and is below the 50% mark for the first time since May 2009 when it registered 43.5%. Inventories decreased to 46.7%, which is 5.3 percentage points below the September reading of 52%. Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy.”

The ISM’s New Orders Index reaching 52.4% in October is significant because when that index is above 52.1%, over time, it is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant $2,000).

ISM’s Production Index registered 50.1% in October, which is a decrease of 1.1 percentage points when compared to the September reading of 51.2%, and grew for the second consecutive month. An index above 51%, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

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