ISM: Manufacturing contraction continues

Published
February 01, 2016 - 06:00pm

Though up two-tenths of 1 percentage point since December 2015, economic activity in the manufacturing sector contracted in January for the fourth consecutive month as measured by the Manufacturing ISM Report on Business. Published Feb. 1 by the Institute for Supply Management (ISM), the report also noted that the overall economy grew for the 80th consecutive month in January.

The January purchasing managers index (PMI) registered 48.2 percent, a slight increase over the seasonally adjusted December reading of 48 percent, reported Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee. Based on monthly data compiled from purchasing and supply executives nationwide, the PMI is one of several indices included in the ISM report.

  • The New Order Index registered 51.5 percent, an increase of 2.7 percentage points from the seasonally adjusted reading of 48.8 percent in December.
  • The Production Index registered 50.2 percent, three-tenths of 1 percentage point higher than the seasonally adjusted December reading of 49.9 percent.
  • The Employment Index registered 45.9 percent, 2.1 percentage points below the seasonally adjusted December reading of 48 percent.
  • The index for inventories of raw materials registered 43.5 percent, the same reading as in December.
  • The Prices Index registered 33.5 percent, also the same reading as in December, which indicates lower raw materials prices for the 15th consecutive month.

"Comments from the panel [of executives surveyed] indicate a mix ranging from strong to soft orders, as eight of our 18 industries report an increase in orders," Holcomb reported.

The industries reporting growth in January are: Textile Mills; Wood Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Furniture & Related Products; Computer & Electronic Products; Machinery; and Electrical Equipment, Appliances & Components.

The 10 industries reporting contraction in January are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Primary Metals; and Chemical Products.

Other highlights from the ISM report include various comments submitted by survey respondents:

  • "The oil and gas sector continues to be challenged by low oil and gas prices. Risk of suppliers filing for bankruptcy and reducing their workforce is becoming an increasing risk. Our company workforce is also declining." (Petroleum & Coal Products)
  • "Business this month [is] better than last month and better than this period last year. Reduced oil and basic chemical prices providing favorable margin comparisons." (Chemical Products)
  • "Huge rollout in wireless in 2016 across all markets. We should be very, very busy." (Computer & Electronic Products)
  • "We are a bit slower, but staying busy." (Fabricated Metal Products)
  • "Business is still strong, but slowing." (Transportation Equipment)
  • "2016 starting off with strong orders." (Primary Metals)
  • "Market is sluggish to start the year." (Wood Products)
  • "Medical device continues to be strong." (Miscellaneous Manufacturing)
  • "Overall demand is higher than expected for post-holiday season." (Plastics & Rubber Products)
  • "Much worldwide macroeconomic uncertainty affecting our business. Business confidence seems low." (Food, Beverage & Tobacco Products)

Related Glossary Terms

  • filing

    filing

    Operation in which a tool with numerous small teeth is applied manually to round off sharp corners and shoulders and remove burrs and nicks. Although often a manual operation, filing on a power filer or contour band machine with a special filing attachment can be an intermediate step in machining low-volume or one-of-a-kind parts.

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