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

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

With a 1.1 cent drop to $3.858 per gallon, this follows declines of 2.5 cents, 1.9 cents, and 0.7 cents over the previous three weeks, with the cumulative four-week decline at 6.2 cents.

Second quarter revenue for transportation and logistics titan UPS headed up 5.6 percent annually at $14.3 billion, while operating profit sank 57.1 percent to $747 million. Quarterly net income fell 57.6 percent to $454 million.

Panjiva, an online search engine with detailed information on global suppliers and manufacturers, recently said it is opening up the “vault,” so to speak. The vault in this case is making its copious amount of trade data accessible through an Application Programming Interface (API), which enables customers to extract Panjiva’s trade data into their own database.

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.