A newly released report from the Institute of Supply Management shows the PMI Index—an indicator of confidence among purchasing managers and supply executives—registered 53.4% for the month of March.1 This represents a slight increase over February and, more importantly, indicates the manufacturing sector expanded for the 32nd consecutive month.
The Institute for Supply Management’s latest Report on Business shows 15 out of 18 manufacturing industries reported growth in March. Among them:
- Apparel, Leather & Allied Products
- Nonmetallic Mineral Products
- Primary Metals
- Petroleum & Coal Products
- Paper Products
- Miscellaneous Manufacturing
- Wood Products
- Furniture & Related Products
- Transportation Equipment
- Plastics & Rubber Products
- Food, Beverage & Tobacco Products
- Printing & Related Support Activities
- Fabricated Metal Products
- Electrical Equipment, Appliances & Components
By comparison, two industries reported contraction in March: computer & electronic products; and chemical products.
“Comments from the panel remain positive, with several respondents citing increased sales and demand for the next few months,” said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee.
Holcomb provided examples of some of those comments:
Chemical Products—a“Business is robust, driven by a healthy demand for exports and relatively stable raw materials [pricing].”
Machinery—“Our customers are reporting a potential 10% to13% increase in purchases for 2012. Actual orders continue to be slow to appear, but expectations continue to be high.”
Fabricated Metal Products—“Business conditions [are] very strong and so is outlook.”
Miscellaneous Manufacturing—“Business continues to be brisk—if not robust—[this] month and looking forward.”
Computer & Electronic Products—“Business remains essentially stable, with some concerns regarding continued slowdown in China.”
Primary Metals—“Business remains strong.”
Transportation Equipment—“Generally increasing sales/demand [is] driving higher capacity utilization.”
Other aspects of the Institute for Supply Management’s Report on Business provided mixed signals. For example, the index of “New Orders” registered 54.5% in March—a decrease of 0.4 percentage points when compared to February. At the same time, ISM’s Employment Index registered 56.1% last month, 2.9 percentage points higher than the figure reported in February. What’s more, this is the 30th consecutive month of growth in the Employment Index.
The complete March Report on Business is available online.
- A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 34th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 32nd consecutive month. The past relationship between the PMI and the overall economy indicates that the average PMI for January through March (53.3 percent) corresponds to a 3.6% increase in real gross domestic product (GDP). In addition, if the PMI for March (53.4%) is annualized, it corresponds to a 3.7% increase in real GDP annually.