ISM says manufacturing growth slows, but orders, production, employment, inventories up

Tempe, AZ—Despite increasing at a slower rate, economic activity in the manufacturing sector grew for the 15th consecutive month in August, while the overall economy grew for the 34th consecutive month, according to U.S. supply executives in the latest Manufacturing ISM Report On Business by the Institute for Supply Management (ISM).

09/02/2004


Tempe, AZ— Despite increasing at a slower rate, economic activity in the manufacturing sector grew for the 15th consecutive month in August, while the overall economy grew for the 34th consecutive month, according to U.S. supply executives in the latest Manufacturing ISM Report On Business by the Institute for Supply Management (ISM).

ISM's PMI registered 59% in August, a decrease of 3 percentage points from PMI’s 62% in July. ISM's New Orders Index declined 3.5 percentage points, from 64.7% in July to 61.2% in August. Similarly, ISM's Production Index decreased 6.6 percentage points, from 66.1% in July to 59.5% in August. ISM’s Employment Index was at 55.7% for August, a decrease of 1.6 percentage points compared to its 57.3% reported in July.

ISM explains that a PMI rate above 50% indicates that the manufacturing economy is generally expanding, while a reading below 50% indicates that the economy is generally contracting. Also, a PMI over 42.8% indicates a general expansion of the overall economy.

'The rate of growth in the manufacturing sector decelerated during August, but overall the sector is still quite positive, as both new orders and production remain at high levels. The Purchasing Managers’ Index (PMI) of 59% for August ended a nine-month period in which the PMI was at 60%,' says Norbert Ore, chair of ISM’s Manufacturing Business Survey Committee and group director for strategic sourcing and procurement at Georgia-Pacific Corp.

Meanwhile, ISM's Supplier Deliveries Index registered 63.2%, which was 1 percentage point lower than July's 64.2% rate. ISM's Inventories Index registered 51.7% in August, up from 49.9% in July. ISM's Customers' Inventories Index for August was 45.5%, an increase of 8 percentage points compared to July’s 37.5% reading. ISM's Prices Index in August was 81.5%, or 4.5 percentage points higher than the 77% reported in July.

In addition, ISM's Backlog of Orders Index decreased 3 percentage points, registering 55% in August compared to 58% in July. ISM's New Export Orders Index registered 54.2%, a decrease of 2 percentage points from July's 56.2%. ISM's Imports Index decreased 0.7 of a percentage point to 59.2% in August, down from 59.9% in July.

Also, ISM reported its Prices Index has regained momentum because prices manufacturers pay were driven by customer demand and energy costs. ISM's Customers' Inventories Index indicates that customer inventories are too low, though the rate of decline slowed in August, and the Backlog of Orders Index showed that order backlogs increased during the month. ISM’s New Export Orders and Imports Indexes continued growing in August.

Supply executives responding to ISM’s survey in August focused on energy costs, price inflation in basic materials, particularly steel, and slowing sales growth. The growth in inventories seems to be part of a 'catch up' strategy to meet higher demand on the sales side, which seems especially true for the continued strength in imports. Many still rate their business as 'strong,' while others believe they’re starting to see new orders taper off.

'August was another good month for the manufacturing sector. While the near-term outlook remains positive, both the Inventories and Customers' Inventories indexes show signs of inventory building. Such a build-up may be justified, if it is to meet additional sales demand, and if new orders and production remain strong,' adds Ore.

Control Engineering Daily News Desk
Jim Montague, news editor
jmontague@reedbusiness.com





The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Robotic integration and cloud connections; SCADA and cybersecurity; Motor efficiency standards; Open- and closed-loop control; Augmented reality
Controller programming; Safety networks; Enclosure design; Power quality; Safety integrity levels; Increasing process efficiency
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Robotic integration and cloud connections; SCADA and cybersecurity; Motor efficiency standards; Open- and closed-loop control; Augmented reality
Controller programming; Safety networks; Enclosure design; Power quality; Safety integrity levels; Increasing process efficiency
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Robotic integration and cloud connections; SCADA and cybersecurity; Motor efficiency standards; Open- and closed-loop control; Augmented reality
Controller programming; Safety networks; Enclosure design; Power quality; Safety integrity levels; Increasing process efficiency
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me