ISM Reports Strong Manufacturing Performance So Far

Continuing the growth pattern laid out in the first quarter, manufacturing growth to start the second quarter in April was strong, according to the monthly Manufacturing Report on Business released by the Institute for Supply Management (ISM).

By ·

Continuing the growth pattern laid out in the first quarter, manufacturing growth to start the second quarter in April was strong, according to the monthly Manufacturing Report on Business released by the Institute for Supply Management (ISM).

The PMI, the index used by the ISM to measure manufacturing activity, saw a 1.2 increase from March to 54.9 in April, which is 0.5 percent above the 12-month average of 54.4. The PMI is still over the 50 mark—which is the benchmark of strong economic activity—in 16 of the last 17 months, coupled with the overall economy growing for 59 consecutive months, according to the ISM.

For the report’s four key metrics, including PMI, two were up, one was flat, and one declined. New orders, often known as the engine driving manufacturing, held firm at 55.1 and remained in growth mode for the 11th month in a row. Production dropped 0.2 percent to 55.7, and employment showed growth for the tenth straight month, heading up 3.6 percent to 54.7.

ISM noted in the report that comments from its member panel included in the report “generally remain positive,” although some members voiced concern over international economic and political issues potentially impacting demand.

A fabricated metal products respondent said that the winter weather has slowed down order intake but not inquiries, adding that his company believes there is pent-up demand waiting for the winter to break. And an electrical equipment, appliances, and components respondent said there was a softening in bookings, while shipments remain at the same level. On the geopolitical front, a miscellaneous manufacturing respondent stated that Russia may stop importing medical devices manufactured completely outside of Russia, which would have a big negative impact at 5-to-10 percent lost revenue.

“There is a lot to like about this report, with 17 of 18 industries reporting growth and also the PMI has progressively increased month-over-month every month since January,” said Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, in an interview. “Despite the harsh weather and sort of soft beginning to the year, things are set up really well for a continuation of this story.”

Even though new orders growth was flat at 55.1, Holcomb said it still represents good solid growth, with 13 industries reporting new orders’ growth in the report and only one reporting a decrease and four standing pat.
And he described the 3.6 percent increase in employment as a bit of a catch up, as well as a lead indicator that manufacturing sees a continuation of good orders in its order books, too.

Supplier deliveries in April slowed down at a faster rate to 55.9 from 54.0 in March (under 50 indicates faster deliveries).

“This number is in a good place and shows good management and north of 50, which we like in an environment you see improving and continuous growth and don’t want to be caught short with inventory in an environment like we have now,” he said.

 

 


About the Author

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. Contact Jeff Berman

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!

Article Topics

ISM · All Topics
Latest Whitepaper
The View from the New “Single Window”
The single window, officially known as the "International Trade Data System," operates via the Customs and Border Protection (CBP) agency's Automated Commercial Environment (ACE) platform, and serves as a single point of contact for all trade filings.
Download Today!
From the March 2017 Issue
WMS vendors are stepping up to the plate and developing functionalities and solutions that meet the complex needs of today’s companies. Our top analysts take a peek into these developments and discuss the DC of the future and the software that will support it.
5 Supply Chain Trends Happening Now
2017 Warehouse/DC Equipment Survey: Investment up as service pressures rise
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Trucking Regulations & Infrastructure Update
In this session our panel brings shippers up to date on the state of transportation regulations. Discussion will revolve around regulatory reform, aspects of the federal highway bill and what the transportation landscape looks like in the early days of the Trump administration.
Register Today!
EDITORS' PICKS
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...
ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...

2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...