On July 1st, the Institute for Supply Management (ISM) released their latest Report on Business, a monthly publication that provides industry trends and statistics for the manufacturing sector. The referenced Purchasing Managers Index (PMI) below is a composite index for the manufacturing industry compiled by the ISM, and is based on five subcategories: new orders, production, employment, supplier deliveries and inventories. A PMI index over 50.0 indicates that the manufacturing environment is expanding, and the ISM uses this information to analyze the state of the economy and predict future growth or contraction. See below for the PMI of the first six months of 2018 and 2019:
First Half of 2019
First Half of 2018
June 2019 marked the 122nd consecutive month of expansion for the manufacturing sector. However, as indicated in the table above, expansion has slowed since 2018. In June 2019, customer demand did not increase for the first time since December 2015, due to the decrease of new orders, exports, customers’ inventories, and a backlog of orders. Of the six industry sectors (Printing and Related Support Activities; Textile Mills; Electrical Equipment, Appliances and Components; Paper Products; Plastics and Rubber Products; and Food, Beverage and Tobacco Products), two contracted, three expanded, and one remained the same. Additionally, supplier deliveries saw a reduction in growth for the 40th consecutive month, and the inventories index experienced a decrease for the first time since December 2017. Relative to production, inventories were depleted as many manufacturers continued to closely manage their supply chains.
Prices for some raw materials also decreased in June, including aluminum, steel, energy and copper, whereas other raw materials such as food ingredients and electronic components experienced shortages and subsequent price increases.
These decreases were partially offset by the sustained increase of consumption (based on production and employment indexes) and bolstered by the continued low unemployment rate, only 3.6% in May 2019.
For further information on the ISM Report on Business, please access the following link:
You’ve heard our thoughts… We’d like to hear yours
The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.