Monday, January 04, 2010

The index of U.S. manufacturing rose to 55.9 from 53.6 in November, according to the latest Manufacturing Institute for Supply Management (ISM) Report On Business®. This is the highest level since April 2006 and beat estimates from economists, who expected the index to reach 54.3, according to a consensus compiled by Briefing.com.

"The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9 percent, its highest reading since April 2006 when it registered 56 percent," said Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee. "This month's report is quite strong as both the New Orders and Production Indexes are above 60 percent. The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the Customers' Inventories Index. Customers' inventories have been 'too low' for nine consecutive months, and this month's index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline."

Performance by Industry

In December, nine of the 18 manufacturing industries reported growth. The industries — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Transportation Equipment; Paper Products; Furniture & Related Products; and Food, Beverage & Tobacco Products. The seven industries reporting contraction in December — listed in order — are: Wood Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Chemical Products; Printing & Related Support Activities; and Fabricated Metal Products.

New Orders

ISM's New Orders Index registered 65.5 percent in December, 5.2 percentage points higher than the 60.3 percent registered in November. This is the sixth consecutive month of growth in the New Orders Index. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 11 industries reporting growth in new orders in December — listed in order — are: Apparel, Leather & Allied Products; Computer & Electronic Products; Textile Mills; Electrical Equipment, Appliances & Components; Paper Products; Primary Metals; Furniture & Related Products; Food, Beverage & Tobacco Products; Machinery; Transportation Equipment; and Fabricated Metal Products. The four industries reporting decreases in new orders in December are: Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; and Chemical Products.

Production

ISM's Production Index registered 61.8 percent in December, which is an increase of 1.9 percentage points from the November reading of 59.9 percent. An index above 50.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the seventh consecutive month the Production Index has registered above 50 percent.

The 11 industries reporting growth in production during the month of December — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Primary Metals; Furniture & Related Products; Computer & Electronic Products; Machinery; Paper Products; Transportation Equipment; and Fabricated Metal Products. The five industries reporting decreases in production in December are: Wood Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Nonmetallic Mineral Products; and Chemical Products.

Employment

ISM's Employment Index registered 52 percent in December, which is 1.2 percentage points higher than the 50.8 percent reported in November. This is the third month of growth in manufacturing employment, following 14 consecutive months of decline. An Employment Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Seven of the 18 manufacturing industries reported growth in employment in December in the following order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Paper Products; Transportation Equipment; Machinery; and Electrical Equipment, Appliances & Components. The eight industries that reported decreases in employment during December — listed in order — are: Wood Products; Textile Mills; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; and Fabricated Metal Products.