PMI® at 55.3%; June Manufacturing ISM® Report On Business®; New Orders, Employment and Production Growing; Inventories Growing; Supplier Deliveries Slowing

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 June 2014.

TEMPE, Ariz., July 1, 2014 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in June for the 13th consecutive month, and the overall economy grew for the 61st 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^® (ISM^®) Manufacturing Business Survey Committee. "The June PMI^® registered 55.3 percent, a decrease of 0.1 percentage point from May's reading of 55.4 percent, indicating expansion in manufacturing for the 13th consecutive month. The New Orders Index registered 58.9 percent, an increase of 2 percentage points from the 56.9 percent reading in May, indicating growth in new orders for the 13th consecutive month. The Production Index registered 60 percent, 1 percentage point below the May reading of 61 percent. Employment grew for the 12th consecutive month, registering 52.8 percent, the same level of growth as reported in May. Inventories of raw materials remained at 53 percent, the same reading as reported in both May and April. The price of raw materials grew at a slower rate in June, registering 58 percent, down 2 percentage points from May."

Of the 18 manufacturing industries, 15 are reporting growth in June in the following order: Furniture & Related Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Machinery; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; and Paper Products. The three industries reporting contraction in June are: Textile Mills; Chemical Products; and Plastics & Rubber Products.

WHAT RESPONDENTS ARE SAYING ...

• "Business volume is increasing at a good pace and consumers appear to be spending more." (Food, Beverage & Tobacco Products) 
• "The strength of the automotive industry continues to drive the high demand for steel." (Fabricated Metal Products) 
• "Business still very solid and strong — Class 8 Truck and RV." (Transportation Equipment) 
• "Seasonal business remains strong." (Primary Metals) 
• "Another strong month overall." (Computer & Electronic Products) 
• "Outlook is better. General uptick in our company's confidence." (Chemical Products) 
• "Orders are picking up, but pricing has declined in last month. Not the norm for this time of year." (Wood Products) 
• "Conditions are slightly more favorable than last year." (Printing and Related Support Activities) 
• "Business is picking up once again." (Machinery)
• "Business conditions are stable to improving." (Miscellaneous Manufacturing)
  

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.
*Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price
Aluminum (5); Electric Components; Hydrochloric Acid; Lumber (4); MRO Supplies (2); Natural Gas (2); Nickel (4); Plastic Components; Stainless Steel (4); Steel (7); and Steel — Hot Rolled (3).

Commodities Down in Price
Copper (4) is the only commodity reported down in price.

Commodities in Short Supply
Helium (2); and Wood Pallets (2).

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

JUNE 2014 MANUFACTURING INDEX SUMMARIES

PMI^®
Manufacturing expanded in June as the PMI^® registered 55.3 percent, a slight decrease of 0.1 percentage point when compared to May's reading of 55.4 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 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI^® indicates growth for the 61st consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 13th consecutive month. Holcomb stated, "The past relationship between the PMI^® and the overall economy indicates that the average PMI^® for January through June (54.0 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^® for June (55.3 percent) is annualized, it corresponds to a 4.0 percent increase in real GDP annually."

THE LAST 12 MONTHS

New Orders
ISM^®'s New Orders Index registered 58.9 percent in June, an increase of 2 percentage points when compared to the 56.9 percent reported in May, indicating growth in new orders for the 13th consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 12 industries reporting growth in new orders in June — listed in order — are: Nonmetallic Mineral Products; Wood Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Machinery; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Transportation Equipment; Petroleum & Coal Products; and Miscellaneous Manufacturing. The four industries reporting a decrease in new orders during June are: Textile Mills; Apparel, Leather & Allied Products; Chemical Products; and Computer & Electronic Products.

Production
ISM^®'s Production Index registered 60 percent in June, which is a decrease of 1 percentage point when compared to the 61 percent reported in May, indicating growth in production for the fourth consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 13 industries reporting growth in production during the month of June — listed in order — are: Nonmetallic Mineral Products; Printing & Related Support Activities; Furniture & Related Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Machinery; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Paper Products; Primary Metals; Computer & Electronic Products; Petroleum & Coal Products; and Transportation Equipment. The only industry reporting a decrease in production during June is Chemical Products.

Employment
ISM^®'s Employment Index registered 52.8 percent in June, which is the same percentage as reported in May, and represents the 12th consecutive month of growth in employment. An Employment Index above 50.6 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, nine reported growth in employment in June in the following order: Furniture & Related Products; Textile Mills; Petroleum & Coal Products; Fabricated Metal Products; Transportation Equipment; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The five industries reporting a decrease in employment in June are: Plastics & Rubber Products; Primary Metals; Paper Products; Chemical Products; and Nonmetallic Mineral Products.

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations slowed in June at a slower rate relative to May as the Supplier Deliveries Index registered 51.9 percent. This month's reading is 1.3 percentage points lower than the 53.2 percent reported in May. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 11 industries reporting slower supplier deliveries in June — listed in order — are: Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Machinery; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Chemical Products; and Electrical Equipment, Appliances & Components. The only industry reporting faster supplier deliveries during June is Textile Mills. Six industries reported no change in supplier deliveries in June compared to May.

Inventories*
The Inventories Index registered 53 percent in June, the same percentage as reported in both May and April, and indicates raw materials inventories are growing for the fifth consecutive month. An Inventories Index greater than 42.8 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 eight industries reporting higher inventories in June — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Nonmetallic Mineral Products; Computer & Electronic Products; Primary Metals; Food, Beverage & Tobacco Products; Machinery; and Chemical Products. The five industries reporting lower inventories in June are: Plastics & Rubber Products; Paper Products; Petroleum & Coal Products; Fabricated Metal Products; and Textile Mills.

Customers' Inventories*
ISM^®'s Customers' Inventories Index registered 46.5 percent in June, the same percentage as reported in May, indicating that customers' inventories are considered too low. Customers' inventories have been too low for 31 consecutive months, as 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 June are: Petroleum & Coal Products; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; and Miscellaneous Manufacturing. The seven industries reporting customers' inventories as too low during June — listed in order — are: Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; Paper Products; and Fabricated Metal Products. Six industries reported no change in customers' inventories in June compared to May.

Prices*
The ISM^® Prices Index registered 58 percent in June, which is a decrease of 2 percentage points compared to the May reading of 60 percent. In June, 23 percent of respondents reported paying higher prices, 7 percent reported paying lower prices, and 70 percent of supply executives reported paying the same prices as in May. 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, 11 reported paying increased prices during the month of June in the following order: Furniture & Related Products; Paper Products; Petroleum & Coal Products; Fabricated Metal Products; Machinery; Primary Metals; Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. The two industries reporting paying lower prices during the month of June are: Textile Mills; and Computer & Electronic Products.

Backlog of Orders*
ISM^®'s Backlog of Orders Index registered 48 percent in June, which is 4.5 percentage points lower than the 52.5 percent reported in May, indicating contraction in order backlogs for the first time since January 2014 when the Backlog of Orders Index also registered 48 percent. Of the 83 percent of respondents who reported their backlog of orders, 18 percent reported greater backlogs, 22 percent reported smaller backlogs, and 60 percent reported no change from May.

The six industries reporting increased order backlogs in June — listed in order — are: Plastics & Rubber Products; Furniture & Related Products; Paper Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Miscellaneous Manufacturing. The six industries reporting a decrease in order backlogs during June — listed in order — are: Textile Mills; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Computer & Electronic Products; Chemical Products; and Fabricated Metal Products. Six industries reported no change in backlog of orders in June compared to May.

New Export Orders*
ISM^®'s New Export Orders Index registered 54.5 percent in June, which is 2 percentage points lower than the 56.5 percent reported in May. June's reading reflects growth in the level of exports for the 19th consecutive month.

The nine industries reporting growth in new export orders in June — listed in order — are: Furniture & Related Products; Primary Metals; Fabricated Metal Products; Transportation Equipment; Chemical Products; Miscellaneous Manufacturing; Machinery; Paper Products; and Computer & Electronic Products. The three industries reporting a decrease in new export orders during June are: Wood Products; Nonmetallic Mineral Products; and Apparel, Leather & Allied Products. Six industries reported no change in new export orders in June compared to May.

Imports*
ISM^®'s Imports Index registered 57 percent in June, which is 2.5 percentage points higher than the 54.5 percent reported in May. This month's reading represents 17 consecutive months of growth in imports.

The 11 industries reporting growth in imports during the month of June — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; Machinery; Furniture & Related Products; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. The only industry reporting a decrease in imports during June is Apparel, Leather & Allied Products.

* 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 decreased 10 days to 117 days. Average lead time for Production Materials increased 2 days to 61 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 1 day to 25 days.

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 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 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 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 Institute for Supply Management^®, the first supply institute in the world. Founded in 1915, ISM^®'s mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. By executing and extending its mission through education, research, standards of excellence and information dissemination — including the renowned monthly ISM^® Report On Business^® — ISM^® maintains a strong global influence among individuals and organizations. ISM^® is a not-for-profit educational association that serves professionals with an interest in supply management who live and work in more than 80 countries. 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 July 2014 data will be released at 10:00 a.m. (ET) on Friday, August 1, 2014.

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SOURCE Institute for Supply Management