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ISM: Manufacturing Sector Index Falls to Lowest Level Since July 2009

December 04, 2012, 07:41 AM
Filed Under: Economy

Economic activity in the manufacturing sector contracted in November following two months of modest expansion, while the overall economy grew for the 42nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The PMI registered 49.5 percent, a decrease of 2.2 percentage points from October's reading of 51.7 percent, indicating contraction in manufacturing for the fourth time in the last six months. This month's PMI reading reflects the lowest level since July 2009 when the PMI™ registered 49.2 percent, according to the report issued by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

New Orders Index registered 50.3 percent, a decrease of 3.9 percentage points from October, indicating growth in new orders for the third consecutive month. The Production Index registered 53.7 percent, an increase of 1.3 percentage points, indicating growth in production for the second consecutive month. The Employment Index registered 48.4 percent, a decrease of 3.7 percentage points, which is the index's lowest reading since September 2009 when the Employment Index registered 47.8 percent. The Prices Index registered 52.5 percent, reflecting a decrease of 2.5 percentage points.

Comments from the panel this month generally indicate that the second half of the year continues to show a slowdown in demand; respondents also express concern over how and when the fiscal cliff issue will be resolved."

Performance by Industry

Of the 18 manufacturing industries, six are reporting growth in November in the following order:

  • Petroleum & Coal Products
  • Paper Products
  • Furniture & Related Products
  • Electrical Equipment, Appliances & Components
  • Food, Beverage & Tobacco Products
  • Computer & Electronic Products

The 11 industries reporting contraction in November — listed in order — are:

  • Apparel, Leather & Allied Products
  • Wood Products
  • Primary Metals
  • Transportation Equipment
  • Chemical Products
  • Fabricated Metal Products
  • Miscellaneous Manufacturing
  • Nonmetallic Mineral Products
  • Plastics & Rubber Products
  • Machinery
  • Printing & Related Support Activities

What respondents are saying ...

  • "Conditions still appear to be positive for continued growth in sales." (Machinery)
  • "Business is steady, but not much more than that. We are in a lull." (Food, Beverage & Tobacco Products)
  • "The principle business conditions that will affect the company over the next three or four quarters will be the U.S. federal government tax and budgetary policies; the impact of those policies is not yet clear." (Petroleum & Coal Products)
  • "Differences between first half of year and remaining half are very dramatic, growing to a peak in the middle of the year with a gradual decline since." (Plastics & Rubber Products)
  • "Seeing a slowdown in request for quote activity." (Computer & Electronic Products)
  • "The fiscal cliff is the big worry right now. We will not look toward any type of expansion until this is addressed; if the program that is put in place is more taxes and big spending cuts — which will push us toward recession — forget it." (Fabricated Metal Products)
  • "Seeing a slowdown in demand across markets." (Electrical Equipment, Appliances & Components)
  • "Economy is very sluggish. Production is down and orders have slowed considerably from Q1." (Transportation Equipment)
  • "East Coast storms delayed some shipments." (Primary Metals)
  • "Global economic uncertainty still seems to be sticking around which is not necessarily making things worse, but it is also not making things better from a demand standpoint." (Chemical Products)

Read the full November Manufacturing ISM Report On Business.








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