The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) accelerated to a two-year high in December. The composite index rose from 53.2 in November to 54.7 in December, its highest level since December 2014. It was the second consecutive increase in the headline number, mirroring the jump in business confidence seen in other economic indicators since the election. Indeed, all of the sample comments provided by the ISM echoed the improvement in activity and outlook, with the comments of one plastics of rubber products manufacturer summing up the thoughts of many: “Our business remains strong, and we are seeing continued growth.” Along those lines, respondents also cited a tight labor market and a pickup in inflationary pressures, both of which would also be consistent with stronger demand and output.
Looking more closely at the data, the underlying figures were encouraging in December, including very healthy gains for new orders (up from 53.0 to 60.2) and production (up from 56.0 to 60.3). It was the first time both of these measures have exceeded 60—signifying strong expansions—in 25 months, or since November 2014. Growth in export sales (up from 52.0 to 56.0) and employment (up from 52.3 to 53.1) also improved for the month. Read More
The Census Bureau said that new factory orders rose 0.3 percent in September, slowing slightly from the 0.4 percent gain seen in August. These data were pulled somewhat lower by a sharp decline in defense aircraft and parts, with transportation equipment orders down 1.1 percent. Excluding transportation, new orders for manufactured goods increased 0.6 percent. Over the longer term, new factory orders have been quite soft over the past 12 months, up 0.6 percent since September 2015 or down 0.1 percent year-over-year with transportation excluded. This suggests broader weaknesses for manufacturers in terms of demand, perhaps highlighting why business leaders in the sector continue to be so cautious. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) continued to expand modestly in October, sustaining the rebound seen in September. The composite index edged up from 51.5 in September to 51.9 in October, growing for the second straight month. Overall, this is encouraging for a sector that has seen subpar growth over much of the past two years on global headwinds and economic anxieties. On the positive side, production (up from 52.8 to 54.6) and exports (up from 52.0 to 52.5) both accelerated in October, and employment (up from 49.7 to 52.9) expanded for only the second time year-to-date. Manufacturers have been rather cautious so far in 2016, with hiring pulling back. Hopefully, better hiring data will follow stronger demand and output figures moving forward. Read More
The Census Bureau said that new durable goods orders continue to disappoint in September. New orders were off 0.1 percent, edging down from $227.6 billion to $227.3 billion. On a year-over-year basis, sales have increased 1.6 percent since September 2015, up from $223.7 billion. However, these data have been skewed by volatility in the transportation equipment segment. In September, transportation equipment orders fell 0.8 percent, largely on reduced activity for defense aircraft and parts. Excluding transportation, new orders for durable goods were up 0.2 percent in September, but over the past 12 months, they were essentially unchanged, down 0.04 percent.
As such, the broader demand for durable goods over the past year remained weak, highlighting ongoing challenges in the sector. Along those lines, core capital goods orders (or nondefense capital goods excluding aircraft) declined 1.2 percent in September, with a year-over-year decrease of 4.1 percent. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) unexpectedly contracted in August for the first time since February. The composite index dropped from 52.6 in July to 49.4 in August. A couple of the sample responses cited a “flat” business environment for the month. Indeed, new orders (down from 56.9 to 49.1) and production (down from 55.4 to 49.6) both shifted from decent growth in July to decreased activity in August, with employment (down from 49.4 to 48.3) remaining in negative territory for the second straight month.
Overall, this is a disappointing result, as it temporary suspends the narrative that manufacturing was beginning to stabilize after weaknesses seen earlier in the year. Yet, more than anything, this report shows that the sector’s challenges continue to linger even as other data have been more promising. One positive take way was exports (unchanged at 52.5), which have expanded now for six straight months. Read More
The Census Bureau said that new durable goods orders increased 3.4 percent in April, extending the 1.9 percent gain seen in March. Sales of new durable goods orders rose from $228.3 billion in March to $235.9 billion in April. Demand have risen in three of the four months so far in 2016, providing some encouragement for a sector that has experienced its share of softness over the past year. On a year-over-year basis, sales have risen from $231.5 billion in April 2015, an increase of 1.9 percent. Yet, much of that gain came from transportation equipment, particularly aircraft sales. Excluding transportation, new orders for durable goods increased by just 0.4 percent, and over the past 12 months, that figure was down 1.4 percent. This suggests that demand remains somewhat weaker than the headline number would seem to indicate – a sign that durable goods manufacturers continue to be challenged beyond automobiles and aircraft. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) expanded for the second straight month, albeit at a slower pace in April. The composite index declined from 51.8 in March to 50.8 in April, but even with the decrease, this represented progress in the manufacturing sector after contracting for five consecutive months from October through February. New orders (down from 58.3 to 55.8) and production (down from 55.3 to 54.2) each grew at decent rates for the month despite some easing in this release, and exports (up from 52.0 to 52.5) accelerated, increasing for only the third time in the last 12 months.
Last month’s release helped to fuel the narrative that manufacturing activity was starting to stabilize, and the current data mostly support that view. At the same time, though, manufacturers remain challenged by global headwinds and still-low commodity prices, and a number of economic indicators have been disappointing, highlighting the fact that business’ struggles are still far from over. The sample comments tended to echo this nuanced view of modest improvements, with some respondents noting a pickup in sales while others cited ongoing sluggishness. One’s perspective was likely industry-specific. Read More
The Census Bureau said that new durable goods orders increased by 0.8 percent in March, rebounding somewhat after the 3.1 percent decline seen in February. This was weaker-than-expected, with a consensus expecting a gain of 1.8 percent. Sales of new durable goods orders rose from $228.9 billion in February to $230.7 billion in March. Overall, demand remains quite soft, with the sector challenged by global headwinds and lingering anxieties in the economic outlook. Order volumes have been highly volatile from month-to-month over the course of the past year, with sales trending lower since peaking in 2015 at $241.0 billion in July. On a year-over-year basis, new durable goods orders have fallen 2.5 percent, down from $236.7 billion in March 2015. Even with transportation equipment sales excluded, year-over-year growth declined by 1.4 percent, with orders down 0.2 percent for the month, highlighting the broad-based softness of demand for durable goods over the past 12 months. Read More