Subscribe to our free, weekly email newsletter!


ISM reports strong manufacturing growth for January

By Jeff Berman, Group News Editor
February 01, 2012

Manufacturing picked up in 2012 where it left off in 2011: in growth mode.

The Institute for Supply Management (ISM) reported today that the PMI in January, its index used to measure manufacturing activity, hit 54.1 in January, which was 1.0 percent better than January’s 53.1. This marks the highest PMI reading since June 2011, when it hit 55.8. The ISM says that any reading 50 or higher is a sign of economic growth. Since dropping to 51.8 in October, the PMI has grown 2.3 percent during that period.

January’s reading stretches the current manufacturing growth streak to 30 consecutive months, while the overall economy grew for the 32nd consecutive month.

Looking at the report’s key indicators, New Orders rose 2.8 percent to 57.6, and Production tailed off 3.2 percent to 55.7. Employment was basically flat at 54.3. Even though two of these three metrics saw declines, they are each comfortably in the 50’s, which translates to positive growth.

“What a great way to start the year,” said Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, in an interview. “54.1 is a really good number for the PMI, and I especially like the New Orders (up 2.8 percent to 57.6) number, as that is what drives this whole system. Production is still in a good position, too, and Employment is in a great range.”

Supplier Deliveries in January headed up 2.1 percent to 53.6, which Holcomb said was another strong example of the key indicators in the right range and heading in the right direction.

While Production was down 3.2 percent at 55.7, Backlog of Orders was up 4.5 percent to 52.5. Holcomb said this indicates that there may have been maintenance January comes off a holiday period and that can create backlogs at times, which may have been the case.

Prices in January jumped up 8.0 percent to 55.5, representing its biggest monthly gain since September. With January leading off the year, Holcomb said this type of growth was not surprising as price negotiations between suppliers and manufacturing customers happen at that time.

“This is when suppliers come in and their contracts allow them to negotiate prices,” said Holcomb. “We had three months of declining prices coming into January, too. This is a normal indication, and I don’t see it amounting to much over the next few months or even in 2012, as price increases for raw materials are likely to stay in the 2-to-3 percent range, which is less than half the increase experienced in 2011.”

January Inventories were up 4.0 percent at 49.5. While they were up a bit, when compared with New Orders at 57.6, it is an 8.1 percent differential, which Holcomb said is strong, adding that the difference between New Orders and Inventories has been positive for four straight months, which bodes well.

Going forward, he said there will be a focus on keeping inventory levels down to control costs throughout the year.

“U.S. manufacturing has demonstrated that it has been an anchor for the U.S. economy,” said Holcomb.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Largely feeling the effects of the recently resolved West Coast ports labor disruption, railroad and intermodal volumes in February were down annually, according to data released by the Association of American Railroads (AAR) this week.

The year 2015 marks a major milestone for the industry, MHI is celebrating its 70th anniversary at ProMat 2015, held March 23-26, 2015.

While the Federal Motor Carrier Safety Administration has made strides in regards to better oversight of motor carriers through its Compliance, Safety, Accountability (CSA) and chameleon vetting safety programs, there is room for improvement for it to improve its oversight to better target high-risk carriers. That was the thesis of a report released this week by the United States General Accountability Office

With an eye on capitalizing on future trade and commerce growth in South Asia, express delivery and logistics services provider DHL today rolled out its plans to build an $85 million EUR ($93 million USD) DHL Express South Asia Hub, which will be a 24-hour express hub facility within the Changi Airfreight Center at the Singapore Changi Airport.

While the Federal Railroad Administration (FRA) has long stated its goal of having Positive Train Control (PTC) technology installed on 40 percent of its network by December 31, 2015, railroad industry stakeholders have repeatedly stated that reaching that deadline would be a stretch. It now appears that the railroad sector has some members of Congress sharing the same line of thought with legislation rolled out this week that pledges to extend the PTC deadline to 2020.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA