March ISM report: Full speed ahead on growth

Manufacturing winning streak hits 34 months as economy continues steady growth

04/03/2012


The manufacturing surge continues to steam toward three full years of growth, according to the March report of the Institute for Supply Management.

Manufacturing activity grew for the 32nd consecutive month in March, and the overall economy grew for the 34th straight month. The PMI Index, the core reporting number of the ISM survey, rose from 52.4% to 53.4%, marking almost three years that the PMI had registered above 50%, the survey’s base growth figure.

“The past relationship between the PMI and the overall economy indicates that the average PMI for January through March (53.3%) corresponds to a 3.6% increase in real gross domestic product,” said report author Bradley J. Holcomb, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee. “In addition, if the PMI for March (53.4%) is annualized, it corresponds to a 3.7% increase in real GDP annually.”

The Production Index increased 3 percentage points from February’s reading of 55.3% to 58.3%, and the Employment Index increased 2.9 percentage points to 56.1%. Of the 18 industries included in the survey, 15 are experiencing overall growth.

Of perhaps equal importance is the bullish comments made by survey participants.  “Business is robust, driven by a healthy demand for exports and relatively stable raw materials,” said a chemical products manufacturer.

 “Our customers are reporting a potential 10% to 13% increase in purchases for 2012,” added a machinery manufacturer. “Actual orders continue to be slow to appear, but expectations continue to be high.”

“We have been experiencing 6% annual growth and expect that to continue in the near term,” said a producer in the food and beverage industry.

MANUFACTURING AT A GLANCE MARCH 2012

 

Index

 

 

 

 

 

Series
Index
Mar

 

 

 

 

 

Series
Index
Feb

 

 

 

 

 

Percentage
Point
Change

 

 

 

 

 

Direction

 

 

 

 

 

Rate of
Change

 

 

 

 

 

Trend(a)
(Months)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PMI

 

 

 

 

 

53.4

 

 

 

 

 

52.4

 

 

 

 

 

+1.0

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

32

 

New Orders

 

 

 

 

 

54.5

 

 

 

 

 

54.9

 

 

 

 

 

-0.4

 

 

 

 

 

Growing

 

 

 

 

 

Slower

 

 

 

 

 

35

 

Production

 

 

 

 

 

58.3

 

 

 

 

 

55.3

 

 

 

 

 

+3.0

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

34

 

Employment

 

 

 

 

 

56.1

 

 

 

 

 

53.2

 

 

 

 

 

+2.9

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

30

 

Supplier Deliveries

 

 

 

 

 

48.0

 

 

 

 

 

49.0

 

 

 

 

 

-1.0

 

 

 

 

 

Faster

 

 

 

 

 

Faster

 

 

 

 

 

2

 

Inventories

 

 

 

 

 

50.0

 

 

 

 

 

49.5

 

 

 

 

 

+0.5

 

 

 

 

 

Unchanged

 

 

 

 

 

From Contracting

 

 

 

 

 

1

 

Customers’ Inventories

 

 

 

 

 

44.5

 

 

 

 

 

46.0

 

 

 

 

 

-1.5

 

 

 

 

 

Too Low

 

 

 

 

 

Faster

 

 

 

 

 

4

 

Prices

 

 

 

 

 

61.0

 

 

 

 

 

61.5

 

 

 

 

 

-0.5

 

 

 

 

 

Increasing

 

 

 

 

 

Slower

 

 

 

 

 

3

 

Backlog of Orders

 

 

 

 

 

52.5

 

 

 

 

 

52.0

 

 

 

 

 

+0.5

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

3

 

Exports

 

 

 

 

 

54.0

 

 

 

 

 

59.5

 

 

 

 

 

-5.5

 

 

 

 

 

Growing

 

 

 

 

 

Slower

 

 

 

 

 

5

 

Imports

 

 

 

 

 

53.5

 

 

 

 

 

54.0

 

 

 

 

 

-0.5

 

 

 

 

 

Growing

 

 

 

 

 

Slower

 

 

 

 

 

4

 

OVERALL ECONOMY

 

Manufacturing Sector

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

34

 

 

 

 

 

Growing

 

 

 

 

 

Faster

 

 

 

 

 

32

 

(a) Number of months moving in current direction

A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

- Edited by Chris Vavra, Plant Engineering, www.plantengineering.com 



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