Monday, February 01, 2010

Economic activity in the manufacturing sector expanded in January for the sixth consecutive month, and the overall economy grew for the ninth consecutive month, according to the January Manufacturing Institute for Supply Management (ISM) Report On Business®.

"The manufacturing sector grew for the sixth consecutive month in January as the PMI rose to 58.4 percent, its highest reading since August 2004 when it registered 58.5 percent," according to Norbert J. Ore, CPSM, C.P.M., chair of the ISM Business Survey Committee.

"This month's report provides significant assurance that the manufacturing sector is in recovery, said Ore. "It appears that it is sustainable," he added.

"Both the New Orders and Production Indexes are above 60 percent, indicating strong current and future performance for manufacturing. This month, 13 of 18 industries reported growth, up from nine industries last month, and this is a good indication that the impact of the recovery is expanding."

"The past relationship between the PMI and the overall economy indicates that the PMI for January (58.4 percent) corresponds to a 5.5 percent increase in real gross domestic product (GDP) on an annual basis," according to Ore. After worrying that the recovery would be tepid, Ore said he's now changed his mind. "This looks like a typical recovery, where we see strong growth in the front of it," Ore said.

The 13 manufacturing industries reporting growth in January — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Machinery; Miscellaneous Manufacturing; Transportation Equipment; Paper Products; Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Wood Products; Fabricated Metal Products; and Plastics & Rubber Products. Furniture & Related Products is the only industry reporting contraction in January.

New Orders

ISM's New Orders Index registered 65.9 percent in January, 1.1 percentage points higher than the seasonally adjusted 64.8 percent registered in December. This is the seventh consecutive month of growth in the New Orders Index. A New Orders Index above 50.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 14 industries reporting growth in new orders in January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Machinery; Wood Products; Paper Products; Food, Beverage & Tobacco Products; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; and Chemical Products. The four industries reporting decreases in new orders in January are: Furniture & Related Products; Petroleum & Coal Products; Plastics & Rubber Products; and Printing & Related Support Activities.

Production

ISM's Production Index registered 66.2 percent in January, which is an increase of 6.5 percentage points from the December reading of 59.7 percent (seasonally adjusted). An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the eighth consecutive month the Production Index has registered above 50 percent.

The 15 industries reporting growth in production during the month of January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Paper Products; Machinery; Primary Metals; Computer & Electronic Products; and Chemical Products. The only industry reporting a decrease in production in January is Furniture & Related Products.