Latest Slump in PMI May Have Impact on Manufacturer’s Supply Chains

Modest gains can resume after the adjustment period, but it looks like a long, cool summer in the manufacturing sector
By Patrick Burnson, Executive Editor
June 04, 2013 - SCMR Editorial

When the ISM reading of 49.0 is combined with a purchasing managers’ manufacturing index (PMI) score of 52.3, the net is so close to neutral to not call it flat, observe economists.

“That is clearly superior to outright, and persistent, declines in Europe and China, but is a clear downshifting from far more robustness in late 2012 and early 2013,” said IHS Global Insight U.S. economist Michael Montgomery. “Becalmed still beats sinking.”

According to Montgomery, more tepid scores oscillating around 50 loom on the horizon through summer as the goods side of the ledger adjusts to ongoing malaise in Europe, and twin fiscal drags of tax hikes and sequester spending cuts weigh on demand for hard goods.

“Modest gains can resume after the adjustment period, but it looks like a long, cool summer in the manufacturing sector,” he added.

The manufacturing sector turned mildly negative in May, with the ISM-manufacturing index cooling to 49.0 from 50.7, its first sub-50 score of 2013 and its worst showing since June 2009. New orders and production triggered both the drop versus April and the sub-50 reading at 48.8 and 48.6, respectively. Few scores beat 50.

Prices scored a 49.5 for the first sub-50 reading since last July; oil prices probably pushed both the May 2013 and July 2012 readings below water, but other traded commodities are under downward pressure from softness in China and Europe.



About the Author

image
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 .(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

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

UPS said this week that it has added significant space to some of its North America-based distribution facilities, which the company increases the total size of its supply chain solutions network size by roughly 1.2 million square-feet. The company’s total global supply chain solutions network is comprised of 596 facilities and about 32.8 million square-feet. UPS offers various services at these facilities, including: warehousing and fulfillment inventory, transportation and returns management; custom kitting and packaging; and store-ready displays.

A week ago, the average price per gallon of diesel gasoline saw its steepest decline in more than two years, when it fell 7 cents to $3.535. This week took that decline a step further, with the Department of Energy’s Energy Information Administration (EIA) reporting that the average price this week fell 11.6 cents to $3.419 per gallon.

With an eye on further expansion of its e-commerce business and related reverse logistics processes, transportation and logistics bellwether FedEx last night announced it has inked an agreement to acquire Pittsburgh-based GENCO, a third-party logistics (3PL) services provider specializing in product lifecycle and reverse logistics.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

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