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PMI™ at 56.4%; October Manufacturing ISM Report On Business®; New Orders, Production and Employment Growing; Inventories Growing; Supplier Deliveries Slowing

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DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of October 2013.

TEMPE, Ariz., Nov. 1, 2013 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in October for the fifth consecutive month, and the overall economy grew for the 53rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The PMI registered 56.4 percent, an increase of 0.2 percentage point from September's reading of 56.2 percent. The PMI has increased progressively each month since June, with October's reading reflecting the highest PMI in 2013. The New Orders Index increased slightly in October by 0.1 percentage point to 60.6 percent, while the Production Index decreased by 1.8 percentage points to 60.8 percent. Both the New Orders and Production Indexes have registered above 60 percent for three consecutive months. The Employment Index registered 53.2 percent, a decrease of 2.2 percentage points compared to September's reading of 55.4 percent. The panel's comments are generally positive about the current business climate; however, there are mixed responses on whether the government shutdown and potential default have had any effect on October's results."

Of the 18 manufacturing industries, 14 are reporting growth in October in the following order: Textile Mills; Food, Beverage & Tobacco Products; Furniture & Related Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Transportation Equipment; Petroleum & Coal Products; Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Machinery; Paper Products; and Fabricated Metal Products. The four industries reporting contraction in October are: Apparel, Leather & Allied Products; Primary Metals; Chemical Products; and Miscellaneous Manufacturing.

WHAT RESPONDENTS ARE SAYING …

  • "New business is booming." (Textile Mills)
  • "The government shutting down and threatening to go into a default position is causing all kinds of concerns in our markets." (Fabricated Metal Products)
  • "The government shutdown has not had any impact on our business that I can determine, nor has it impacted any supplier shipments." (Chemical Products)
  • "Government spending continues to be slow in defense and military. The government shutdown and debt ceiling crisis did not affect business." (Transportation Equipment)
  • "Telecom market — wireless and VOIP — appear to be spiking. We are very busy; busier than we have ever been." (Computer & Electronic Products)
  • "Seasonal demand has not decreased at the typical pace. Market showing resiliency in the residential market." (Primary Metals)
  • "Business continues to improve every month for the past nine months." (Furniture & Related Products)
  • "Big Box Store discounting providing increased sales bump short term." (Food, Beverage & Tobacco Products)
  • "Our customers continue to be cautious and are closely managing their purchases. Business continues to be flat to slightly down." (Machinery)
  • "Outlook on general appliance market continues in a positive direction. Uncertainty, however, looms with unclear government direction pending." (Electrical Equipment, Appliances & Components)

MANUFACTURING AT A GLANCE

OCTOBER 2013

Index

Series Index

Oct

 

Series Index

Sep

 

Percentage

Point

Change

Direction

Rate of Change

Trend* (Months)








PMI

56.4

56.2

+0.2

Growing

Faster

5

New Orders

60.6

60.5

+0.1

Growing

Faster

5

Production

60.8

62.6

-1.8

Growing

Slower

5

Employment

53.2

55.4

-2.2

Growing

Slower

4

Supplier Deliveries

54.7

52.6

+2.1

Slowing

Faster

4

Inventories

52.5

50.0

+2.5

Growing

From Unchanged

1

Customers' Inventories

47.0

43.0

+4.0

Too Low

Slower

23

Prices

55.5

56.5

-1.0

Increasing

Slower

3

Backlog of Orders

51.5

49.5

+2.0

Growing

From Contracting

1

Exports

57.0

52.0

+5.0

Growing

Faster

11

Imports

55.5

55.0

+0.5

Growing

Faster

9





OVERALL ECONOMY

 

Manufacturing Sector

Growing

Faster

53

Growing

Faster

5


*Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price
Corrugated Boxes (15); HDPE Resin (2); LDPE Resin; Polypropylene Resin; Stainless Steel; Steel —  HRPO; and Steel Based Products.

Commodities Down in Price
Caustic Soda is the only commodity reported down in price.

Commodities in Short Supply
Electrical Components; and Helium.

Note: The number of consecutive months the commodity is listed is indicated after each item.

OCTOBER 2013 MANUFACTURING INDEX SUMMARIES

PMI™
Manufacturing expanded in October as the PMI registered 56.4 percent, an increase of 0.2 percentage point when compared to September's reading of 56.2 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the October PMI indicates growth for the 53rd consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the fifth consecutive month. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through October (53.3 percent) corresponds to a 3.5 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for October (56.4 percent) is annualized, it corresponds to a 4.4 percent increase in real GDP annually."

THE LAST 12 MONTHS

Month

PMI


Month

PMI

Oct 2013

56.4


Apr 2013

50.7

Sep 2013

56.2


Mar 2013

51.3

Aug 2013

55.7


Feb 2013

54.2

Jul 2013

55.4


Jan 2013

53.1

Jun 2013

50.9


Dec 2012

50.2

May 2013

49.0


Nov 2012

49.9

Average for 12 months – 52.8

High – 56.4

Low – 49.0

New Orders
ISM's New Orders Index registered 60.6 percent in October, an increase of 0.1 percentage point when compared to the September reading of 60.5 percent. This represents growth in new orders for the fifth consecutive month, at a slightly faster rate than in September. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 10 industries reporting growth in new orders in October — listed in order — are: Textile Mills; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Machinery; Computer & Electronic Products; and Transportation Equipment. The four industries reporting a decrease in new orders during October are: Miscellaneous Manufacturing; Primary Metals; Paper Products; and Chemical Products.

New Orders

%Better

%Same

%Worse

Net

Index

Oct 2013

29

54

17

+12

60.6

Sep 2013

32

53

15

+17

60.5

Aug 2013

33

52

15

+18

63.2

Jul 2013

29

49

22

+7

58.3

Production
ISM's Production Index registered 60.8 percent in October, which is a decrease of 1.8 percentage points when compared to the 62.6 percent reported in September. This month's reading indicates growth in production for the fifth consecutive month, but at a moderately slower rate than in September. An index above 51.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 12 industries reporting growth in production during the month of October — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Plastics & Rubber Products; Machinery; Transportation Equipment; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Petroleum & Coal Products; and Miscellaneous Manufacturing. The three industries reporting a decrease in production in October are: Apparel, Leather & Allied Products; Primary Metals; and Chemical Products.

Production

%Better

%Same

%Worse

Net

Index

Oct 2013

30

54

16

+14

60.8

Sep 2013

29

57

14

+15

62.6

Aug 2013

33

54

13

+20

62.4

Jul 2013

30

55

15

+15

65.0

Employment
ISM's Employment Index registered 53.2 percent in October, which is 2.2 percentage points lower than the 55.4 percent reported in September. This month's reading indicates expansion in employment for the fourth consecutive month, but at a slower rate than in September. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, 12 reported growth in employment in October in the following order: Textile Mills; Wood Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Paper Products; Plastics & Rubber Products; Transportation Equipment; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Petroleum & Coal Products. The five industries reporting a decrease in employment in October are: Apparel, Leather & Allied Products; Chemical Products; Miscellaneous Manufacturing; Machinery; and Computer & Electronic Products.

Employment

%Higher

%Same

%Lower

Net

Index

Oct 2013

21

63

16

+5

53.2

Sep 2013

20

66

14

+6

55.4

Aug 2013

22

63

15

+7

53.3

Jul 2013

21

67

12

+9

54.4

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations slowed in October at a faster rate relative to September as the Supplier Deliveries Index registered 54.7 percent. This month's reading is 2.1 percentage points higher than the 52.6 percent reported in September. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The six industries reporting slower supplier deliveries in October — listed in order — are: Computer & Electronic Products; Petroleum & Coal Products; Machinery; Miscellaneous Manufacturing; Transportation Equipment; and Food, Beverage & Tobacco Products. The three industries reporting faster supplier deliveries in October are: Primary Metals; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. Nine industries reported no change in supplier deliveries in October compared to September.

Supplier Deliveries

%Slower

%Same

%Faster

Net

Index

Oct 2013

11

83

6

+5

54.7

Sep 2013

10

86

4

+6

52.6

Aug 2013

12

81

7

+5

52.3

Jul 2013

11

85

4

+7

52.1

Inventories*
The Inventories Index registered 52.5 percent in October, which is 2.5 percentage points higher than the 50 percent reported in September. This month's reading indicates that respondents are reporting inventories are growing relative to September's unchanged reading. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The six industries reporting higher inventories in October — listed in order — are: Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; and Miscellaneous Manufacturing. The six industries reporting decreases in inventories in October — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Machinery; Fabricated Metal Products; Transportation Equipment; and Chemical Products. Six industries reported no change in raw materials inventories in October compared to September.

Inventories

%Higher

%Same

%Lower

Net

Index

Oct 2013

25

55

20

+5

52.5

Sep 2013

19

62

19

0

50.0

Aug 2013

16

63

21

-5

47.5

Jul 2013

15

64

21

-6

47.0

Customers' Inventories*
The ISM Customers' Inventories Index registered 47 percent in October, which is 4 percentage points higher than in September when the index registered 43 percent. This month's reading indicates that customers' inventories are considered too low, but higher than reported in September. Customers' inventories have registered at or below 50 percent for 55 consecutive months. A reading below 50 percent indicates customers' inventories are considered too low.

The five manufacturing industries reporting customers' inventories as being too high during the month of October are: Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Paper Products; Food, Beverage & Tobacco Products; and Chemical Products. The six industries reporting customers' inventories as too low during October — listed in order — are: Primary Metals; Plastics & Rubber Products; Machinery; Fabricated Metal Products; Computer & Electronic Products; and Transportation Equipment. Seven industries reported no change in customer inventories in October compared to September.

Customers' Inventories

% Reporting

%Too High

%About Right

%Too Low

Net

Index

Oct 2013

60

12

70

18

-6

47.0

Sep 2013

71

10

66

24

-14

43.0

Aug 2013

66

9

67

24

-15

42.5

Jul 2013

67

12

71

17

-5

47.5

Prices*
The ISM Prices Index registered 55.5 percent in October, which is a decrease of 1 percentage point compared to the September reading of 56.5 percent. This month's reading indicates an increase in raw materials prices for the third consecutive month. In October, 22 percent of respondents reported paying higher prices, 11 percent reported paying lower prices, and 67 percent of supply executives reported paying the same prices as in September. A Prices Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

Of the 18 manufacturing industries, eight reported paying increased prices during the month of October in the following order: Plastics & Rubber Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; Chemical Products; Paper Products; Food, Beverage & Tobacco Products; and Transportation Equipment. The only industry reporting paying lower prices during October is Petroleum & Coal Products. Nine industries reported no change in the price of raw materials in October compared to September.

Prices

%Higher

%Same

%Lower

Net

Index

Oct 2013

22

67

11

+11

55.5

Sep 2013

22

69

9

+13

56.5

Aug 2013

21

66

13

+8

54.0

Jul 2013

20

58

22

-2

49.0

Backlog of Orders*
ISM's Backlog of Orders Index registered 51.5 percent in October, which is 2 percentage points higher than the 49.5 percent reported in September. This is the first month of expanding order backlogs since April 2013, when the index registered 53 percent. Of the 86 percent of respondents who reported their backlog of orders, 24 percent reported greater backlogs, 21 percent reported smaller backlogs, and 55 percent reported no change from September.

The seven industries reporting increased order backlogs in October — listed in order — are: Textile Mills; Furniture & Related Products; Plastics & Rubber Products; Petroleum & Coal Products; Chemical Products; Machinery; and Computer & Electronic Products. The six industries reporting decreases in order backlogs during October — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; and Food, Beverage & Tobacco Products.

Backlog of Orders

% Reporting

%Greater

%Same

%Less

Net

Index

Oct 2013

86

24

55

21

+3

51.5

Sep 2013

86

19

61

20

-1

49.5

Aug 2013

85

16

61

23

-7

46.5

Jul 2013

86

15

60

25

-10

45.0

New Export Orders*
ISM's New Export Orders Index registered 57 percent in October, which is 5 percentage points higher than the 52 percent reported in September. October's reading reflects growth in the level of exports relative to September, and is the highest reading since April 2012 when the index registered 59 percent. This month's reading also represents the 11th consecutive month of growth in new export orders.

The 10 industries reporting growth in new export orders in October — listed in order — are: Wood Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery; Furniture & Related Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Transportation Equipment; and Chemical Products. The two industries reporting a decrease in new export orders during October are: Primary Metals; and Paper Products. Six industries reported no change in new export orders in October compared to September.

New Export Orders

% Reporting

%Higher

%Same

%Lower

Net

Index

Oct 2013

78

19

76

5

+14

57.0

Sep 2013

76

14

76

10

+4

52.0

Aug 2013

74

17

77

6

+11

55.5

Jul 2013

75

15

77

8

+7

53.5

Imports*
ISM's Imports Index registered 55.5 percent in October, which is 0.5 percentage point higher than the 55 percent reported in September. October's reading reflects growth in the level of imports relative to September, at a slightly faster rate. This month's reading also represents the 11th consecutive month that the Imports Index has registered at or above 50 percent.

The eight industries reporting growth in imports during the month of October — listed in order — are: Furniture & Related Products; Plastics & Rubber Products; Machinery; Computer & Electronic Products; Fabricated Metal Products; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco Products. The three industries reporting a decrease in imports during October are: Primary Metals; Apparel, Leather & Allied Products; and Miscellaneous Manufacturing. Seven industries reported no change in imports in October compared to September.

Imports

% Reporting

%Higher

%Same

%Lower

Net

Index

Oct 2013

77

18

75

7

+11

55.5

Sep 2013

77

19

72

9

+10

55.0

Aug 2013

77

21

74

5

+16

58.0

Jul 2013

77

22

71

7

+15

57.5

* The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy
Average commitment lead time for Capital Expenditures increased 14 days to 126 days. Average lead time for Production Materials increased 5 days to 63 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 7 days to 32 days.

Percent Reporting

Capital Expenditures

Hand-to-Mouth

30 Days

60 Days

90 Days

6 Months

1 Year+

Average Days

Oct 2013

25

7

13

14

25

16

126

Sep 2013

26

7

14

17

25

11

112

Aug 2013

28

4

15

13

24

16

124

Jul 2013

29

3

13

15

26

14

121









Production Materials

Hand-to-Mouth

30 Days

60 Days

90 Days

6 Months

1 Year+

Average Days

Oct 2013

15

36

25

16

4

4

63

Sep 2013

17

37

23

16

4

3

58

Aug 2013

16

37

21

20

3

3

59

Jul 2013

18

33

21

20

4

4

63









MRO Supplies

Hand-to-Mouth

30 Days

60 Days

90 Days

6 Months

1 Year+

Average Days

Oct 2013

41

41

11

4

2

1

32

Sep 2013

45

40

11

3

1

0

25

Aug 2013

45

39

11

4

1

0

26

Jul 2013

44

37

13

5

1

0

27

About this Report
The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Manufacturing ISM Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 42.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.2 percent, it is generally declining. The distance from 50 percent or 42.2 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

The Manufacturing ISM Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM then compiles the report for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management, the first supply institute in the world. Founded in 1915, ISM exists to lead and serve the supply management profession and is a highly influential and respected association in the global marketplace. ISM's mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM Report On Business® is posted on ISM's website at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).

The next Manufacturing ISM Report On Business® featuring the November 2013 data will be released at 10:00 a.m. (ET) on Monday, December 2, 2013.

Contact:

Rose Marie Goupil


 ISM, ROB Media Relations


Tempe, Arizona


800/888-6276, Ext. 3015


E-mail: rgoupil@ism.ws

(Logo: http://photos.prnewswire.com/prnh/20121101/LA02871LOGO)

SOURCE Institute for Supply Management



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