TMCnet News
PMI® at 54.2%; July 2020 Manufacturing ISM® Report On Business®New Orders and Production Growing; Employment Contracting; Supplier Deliveries Slowing at Slower Rate; Backlog Growing; Raw Materials Inventories Contracting; Customers' Inventories Too Low; Prices Increasing; Exports and Imports Growing TEMPE, Ariz., Aug. 3, 2020 /PRNewswire/ -- Economic activity in the manufacturing sector grew in July, with the overall economy notching a third consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The July PMI® registered 54.2 percent, up 1.6 percentage points from the June reading of 52.6 percent. This figure indicates expansion in the overall economy for the third month in a row after a contraction in April, which ended a period of 131 consecutive months of growth. The New Orders Index registered 61.5 percent, an increase of 5.1 percentage points from the June reading of 56.4 percent. The Production Index registered 62.1 percent, up 4.8 percentage points compared to the June reading of 57.3 percent. The Backlog of Orders Index registered 51.8 percent, an increase of 6.5 percentage points compared to the June reading of 45.3 percent. The Employment Index registered 44.3 percent, an increase of 2.2 percentage points from the June reading of 42.1 percent. The Supplier Deliveries Index registered 55.8 percent, down 1.1 percentage points from the June figure of 56.9 percent. "The Inventories Index registered 47 percent, 3.5 percentage points lower than the June reading of 50.5 percent. The Prices Index registered 53.2 percent, up 1.9 percentage points compared to the June reading of 51.3 percent. The New Export Orders Index registered 50.4 percent, an increase of 2.8 percentage points compared to the June reading of 47.6 percent. The Imports Index registered 53.1 percent, a 4.3-percentage point increase from the June reading of 48.8 percent. "In July, manufacturing continued its recovery after the disruption caused by the coronavirus (COVID-19) pandemic. Panel sentiment was generally optimistic (two positive comments for every one cautious comment), continuing a trend from June. Demand expanded, with the (1) New Orders Index growing at a strong level, supported by the New Export Orders Index re-entering expansion; (2) Customers' Inventories Index remaining at a level considered a positive for future production, and (3) Backlog of Orders Index returning to expansion for the first time in five months. Consumption (measured by the Production and Employment indexes) contributed positively (a combined 7-percentage point increase) to the PMI® calculation, with industries continuing to expand output after May's return-to-work actions. Inputs — expressed as supplier deliveries, inventories and imports — weakened for the third straight month, due to supplier delivery issues abating and import levels re-entering expansion. Inventory levels contracted due to strong production output, supplier delivery difficulties and inventory minimization. Inputs contributed negatively (a combined 4.6-percentage point decrease) to the PMI® calculation but were more than offset by the demand and consumption improvement, as was the case in June. (The Supplier Deliveries and Inventories indexes directly factor into the PMI®; the Imports Index does not.) Prices remained in expansion, supporting a positive outlook. "The growth cycle continues for the second straight month after three prior months of COVID-19 disruptions. Demand and consumption continued to drive expansion growth, with inputs remaining at parity with supply and demand. Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the best-performing industry sector, with Chemical Products, Computer & Electronic Products and Petroleum & Coal Products growing respectably. Transportation Equipment and Fabricated Metal Products continue to contract, but at soft levels," says Fiore. Of the 18 manufacturing industries, 13 reported growth in July, in the following order: Wood Products; Furniture & Related Products; Textile Mills; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Chemical Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Primary Metals; Petroleum & Coal Products; Miscellaneous Manufacturing; and Electrical Equipment, Appliances & Components. The three industries reporting contraction in July are: Transportation Equipment; Machinery; and Fabricated Metal Products. WHAT RESPONDENTS ARE SAYING
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. JULY 2020 MANUFACTURING INDEX SUMMARIES PMI® A PMI® above 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI® indicates the overall economy grew in July for the third consecutive month following contraction in April. "The past relationship between the PMI® and the overall economy indicates that the PMI® for July (54.2 percent) corresponds to a 3.3-percent increase in real gross domestic product (GDP) on an annualized basis," says Fiore. THE LAST 12 MONTHS
New Orders Of the 18 manufacturing industries, the 13 that reported growth in new orders in July — in the following order — are: Wood Products; Furniture & Related Products; Primary Metals; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Transportation Equipment; Computer & Electronic Products; and Machinery. The two industries reporting a decline in new orders in July are: Textile Mills; and Paper Products.
Production The 16 industries reporting growth in production during the month of July — listed in order — are: Primary Metals; Wood Products; Textile Mills; Furniture & Related Products; Printing & Related Support Activities; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Computer & Electronic Products; Nonmetallic Mineral Products; Fabricated Metal Products; Paper Products; Machinery; Transportation Equipment; and Miscellaneous Manufacturing. No industries reported a decrease in production in July.
Employment Of the 18 manufacturing industries, the five industries to report employment growth in July are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Furniture & Related Products; Plastics & Rubber Products; and Computer & Electronic Products. The 10 industries reporting a decrease in employment in July, in the following order, are: Transportation Equipment; Paper Products; Electrical Equipment, Appliances & Components; Primary Metals; Textile Mills; Petroleum & Coal Products; Chemical Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Machinery.
Supplier Deliveries† Twelve of 18 industries reported slower supplier deliveries in July, listed in the following order: Textile Mills; Petroleum & Coal Products; Nonmetallic Mineral Products; Wood Products; Miscellaneous Manufacturing; Furniture & Related Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; Chemical Products; and Fabricated Metal Products. The two industries reporting faster supplier deliveries in July are: Primary Metals; and Electrical Equipment, Appliances & Components.
Inventories The three industries reporting higher inventories in July are: Food, Beverage & Tobacco Products; Paper Products; and Miscellaneous Manufacturing. The nine industries reporting a decrease in inventories in July — listed in order — are: Primary Metals; Nonmetallic Mineral Products; Fabricated Metal Products; Machinery; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; and Transportation Equipment. Six industries reported no change in inventories in July compared to June.
Customers' Inventories† Of the 18 industries, the two reporting higher customers' inventories in July are: Petroleum & Coal Products; and Furniture & Related Products. The 13 industries reporting customers' inventories as too low during July — listed in order — are: Wood Products; Fabricated Metal Products; Paper Products; Plastics & Rubber Products; Primary Metals; Food, Beverage & Tobacco Products; Machinery; Textile Mills; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Chemical Products; Transportation Equipment; and Computer & Electronic Products.
Prices† The 10 industries reporting paying increased prices for raw materials in July — listed in order — are: Textile Mills; Primary Metals; Wood Products; Plastics & Rubber Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Miscellaneous Manufacturing; and Machinery. The two industries reporting a decrease in prices for raw materials in July are: Transportation Equipment; and Fabricated Metal Products. Six industries reported no change in prices in July compared to June.
Backlog of Orders† The 10 industries reporting growth in order backlogs in July, in the following order, are: Wood Products; Plastics & Rubber Products; Primary Metals; Nonmetallic Mineral Products; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Machinery; and Electrical Equipment, Appliances & Components. In July, four industries reported lower backlogs: Textile Mills; Transportation Equipment; Computer & Electronic Products; and Miscellaneous Manufacturing.
New Export Orders† The six industries reporting growth in new export orders in July — in the following order — are: Furniture & Related Products; Wood Products; Computer & Electronic Products; Plastics & Rubber Products; Chemical Products; and Miscellaneous Manufacturing. The four industries reporting a decrease in new export orders in July are: Nonmetallic Mineral Products; Fabricated Metal Products; Paper Products; and Machinery. Seven industries reported no change in new export orders in July compared to June.
Imports† The 11 industries reporting growth in imports in July — in the following order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Wood Products; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; and Food, Beverage & Tobacco Products. The two industries reporting a decrease in imports in July are: Primary Metals; and Miscellaneous Manufacturing.
†The Supplier Deliveries, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports indexes do not meet the accepted criteria for seasonal adjustments. Buying Policy
About This Report The data presented herein is obtained from a survey of manufacturing supply executives 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. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation 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 Inventories) 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® above 42.8 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.8 percent, it is generally declining. The distance from 50 percent or 42.8 percent is indicative of the extent 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 report on information for the current month for U.S. operations only. 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 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 Capital Expenditures; Production Materials; 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. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit. You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 West Elliot Road, Suite 113, Tempe, Arizona 85284-1556, or by emailing [email protected]. Subject: Content Request. ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, PMI®, and NMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc. About Institute for Supply Management® The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. ET. The next Manufacturing ISM® Report On Business® featuring August 2020 data will be released at 10:00 a.m. ET on Tuesday, September 1, 2020. *Unless the New York Stock Exchange is closed.
View original content to download multimedia:http://www.prnewswire.com/news-releases/pmi-at-54-2-july-2020-manufacturing-ism-report-on-business-301104442.html SOURCE Institute for Supply Management |