The end of 2009 brought good news for US purchasers in the manufacturing sector, with new orders, production, employment and overall economic activity on the rise.
In the most recent Manufacturing Institute for Supply Management (ISM) Report on Business—a monthly report based on data compiled from purchasing and supply executives across the US—the Purchasing Managers Index (PMI) rose to 55.9 percent in December, up 2.3 percent from November. This marks the highest reading since April 2006.
By the Manufacturing ISM’s measurements, a PMI in excess of 41.2 percent generally indicates an expansion of the overall economy over time.
In December, nine of 18 US manufacturing industries registered growth. Seven industries reported contractions, while two were unchanged.
The month saw new orders climb by 5.2 percent to 65.5 percent and production increase by 1.9 percent to 61.8 percent. Employment was up 1.2 percent to end the month at 52 percent, while supplier deliveries edged up 0.9 percent to 56.6 percent.
Prices increased and inventories remained low in December. Exports decreased by 1.5 percent, but imports grew by 3.5 percent.
The author of the report, Norbert Ore, shed some light into what the report means for purchasers’ overall outlook.
“This month’s report is quite strong as both the new orders and production indexes are above 60 percent,” he said. “The sector might be benefiting from an excessive destocking cycle as indicated by the recent performance of the customers’ inventories index." He added that customers’ inventories have been classified as "too low" for nine consecutive months, and that the reading in December is the lowest since the inception of the index in January 1997.
“Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline,” he concluded.