Subscribe to our free, weekly email newsletter!


March manufacturing output remains in a good spot, says ISM

By Jeff Berman, Group News Editor
April 01, 2013

While some of its key metrics saw sequential declines, manufacturing growth continues to head in the right direction, according to monthly Manufacturing Report on Business from the Institute for Supply Management (ISM).

The PMI, the index used by the ISM to measure manufacturing activity—51.3 in March—was 2.9 percent lower than February’s 54.2 which represents the highest PMI reading since June 2011s 55.8. A reading of 50 or higher indicates growth is occurring, and the PMI has now been over the 50 mark for the last four months. March’s PMI was in line with the 12-month average of 51.7.

And economic activity in the manufacturing sector had expanded for 34 straight months prior to contraction in June and overall economic activity has now expanded for 46 straight months, according to ISM.

New Orders, which are commonly referred to as the engine that drives manufacturing, fell 6.4 percent to 51.4 in March, and Production—at 52.2—dipped 5.4 percent to 52.2. Employment was the lone metric with a monthly gain, rising 1.6 percent to 54.2.

“Overall, I felt March’s data was still quite positive,” said Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, in an interview. “People have to understand that 51.3 as a PMI still represents the fact that the market was better than it was in February, just not at the same type of rate. The rate was down, but there is still growth. The same goes for New Orders, Production, and Employment.”

The extent of the decline in New Orders—down 6.4—was significant but it came off a very strong February, Holcomb said. And for the first three months of the year on a cumulative basis, he explained that New Orders are on a very good path.

Looking at Production, Holcomb said that to a large extent it is viewed as a decision made by manufacturers to not get too ahead of themselves, with a healthy Backlog of Orders number, which was down 4.0 percent to 51.0 in March.

“This shows that there is plenty of work for manufacturers, but they may not have decided to do things like offer extra overtime or go gangbusters. Instead, it highlights the steady track they are on.”

Supplier Deliveries declined 2.0 percent to 49.4 in March, and Inventories also dropped 2.0 percent to 49.5. And Prices fell 7.0 percent to 54.5.

Holcomb said that was a bigger decline in Prices than anticipated, as the first three months of a calendar year often see price increases floated by suppliers.

“This is in line with that but also very controlled,” said Holcomb. “Inflation appears to be in check, too, based on our index.”

Looking at the overall state—or condition—of manufacturing points to decent trends, which are intact on a year-to-date basis in 2013 and further boosted by things like improving consumer confidence and housing- and auto-related facets of the economy, which also are key in manufacturing output. Wood products and furniture and plastic products and fabricated metals for autos, coupled with electrical equipment, appear to be leading the way, he said.

March Manufacturing Exports posted a very strong month at 56.0 for a 2.5 percent gain. Holcomb noted that when looking at New Orders and Exports collectively it suggests that domestic orders were softer, with export strength providing a way to balance things out.

“Between exports at 56.0 and imports at 54.0 (unchanged from February), it shows that the global economy is alive and well in a participating and meaningful way,” 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

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.

West Coast port authorities may be overstating the obvious when they decry “business as usual.” But it’s refreshing to see them finally coming around.

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

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