Measuring manufacturing growth becomes more of a challenge

Growth is so sluggish that surveys cannot tell the difference between token gains and flat, say economists

By ·

While logistics managers may note that the ISM purchasing managers’ index (PMI) has bounced back over 50 to 50.9 in June from 49.0 in May, some economists maintain that such surveys may not mean much.

“The ISM report says that manufacturing is essentially stalled,” said Michael Montgomery, U.S. economist for IHS Global Insight. “The Markit Economics version (constructed in a very similar fashion) says that there is modest growth.”

Markit Economics is an independent, global provider of some of the world’s most influential business surveys.

“From our perspective, taking all the data, that means growth is so sluggish that surveys cannot tell the difference between token gains and flat,” added Montgomery.

The manufacturing sector turned mildly negative in May, then mildly positive in June. The two-month average is virtually neutral and the three-month average a token plus — all 12-month averages are very close to June readings.

According to IHS, that means that the manufacturing operating environment is almost identical to what it has been for most of the last year, with no signs of improvement or deterioration.

Similar conditions of near stagnation exist overseas, with Europe on the underwater side of neutral but clawing back toward neutral, China just under neutral, and only Japan showing any signs of a recovery that is gaining momentum. Worldwide manufacturing is stuck in the mud.

“The manufacturing sector is recording such modest growth that surveys cannot tell the difference from stagnation,” said Montgomery.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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!

Latest Whitepaper
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...