Manufacturing off to a strong start in 2018

PMI Index remains above 59% as employment, new orders and production remain in a growth mode.

By Bob Vavra, CFE Media February 2, 2018

Manufacturing started 2018 at the same pace it finished the previous year, according to the monthly PMI Index produced by the Institute for Supply Management (ISM).

The index slipped 0.2 percentage points in January to 59.1%, still nearly 20% above the growth threshold of 50%. The PMI has been above the 55% level for more than a year, and the January data meant the index is above 58% for six straight months.

The New Orders, Production and Employment components of the PMI all fell slightly in January, but all are well above growth levels and continue to indicate a strong manufacturing, sector, said Timothy R. Fiore, chairman if the ISM Manufacturing Business Survey Committee. “Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January,” Fiore said.  “Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8% during the month of January."

Among the comments from committee members:

  • "Sales nationally and internationally are strong in Q1. We are increasing our CapEx spend by 30% to 40% over [the] previous year." (Chemical Products)

  • "We have heard reports of additional business due to the recent reduction of tax rates." (Machinery)

  • "Business outlook is positive on all fronts right now with our customers. Budgets are being approved for new projects, and component prices from suppliers have temporarily stabilized." (Computer & Electronic Products)

  • "Our usual winter slowdown has not occurred, and we are very busy with new orders." (Furniture & Related Products)

  • "Slow start to 2018; pricing on metals is heading up and quotes/orders are picking up as well." (Fabricated Metal Products)

  • "Overall, business remains steady. With several key programs to begin ramping up in the industry, outlook looks good for calendar year 2018." (Transportation Equipment)

  • "Employment is very tight in our area." (Food, Beverage & Tobacco Products)

  • "Business continues to strengthen." (Paper Products)

  • "Business is starting the new year strong. Consumer confidence seems to be driving a lot of our customers’ order requirements higher." (Plastics & Rubber Products)

Bob Vavra is Content Manager of Plant Engineering at CFE Media.