Manufacturing economic activity expands again, although plastics contracted

December 2011 marked the 29th consecutive month that economic activity in the manufacturing sector expanded, according to the nation's supply executives in the latest Manufacturing Institute for Supply Management Report on Business. That positive outlook notwithstanding, of the 18 manufacturing industries tracked by the ISM, only nine reported growth in December, and none of those was in the plastics category. Plastics & Rubber Products was the first category in the ordered list of industries showing a contraction in December. One respondent to the survey from the Plastics & Rubber Products industry held a positive note, however: "Business beginning to slow down (seasonal), but will finish with a very strong year."

Bradley J. Holcomb, CPSM, CPSD chair of the ISM's Manufacturing Business Survey Committee noted that the Purchasing Managers Index (PMI) registered 53.9%, an increase of 1.2 percentage points from November's reading of 52.7%, indicating expansion in the manufacturing sector for the 29th consecutive month. "The New Orders Index increased 0.9% from November to 57.6%, reflecting the third consecutive month of growth after three months of contraction," Holcomb said. "Prices of raw materials continued to decrease for the third consecutive month, with the Prices Index registering 47.5%, which is 2.5 percentage points higher than the November reading of 45%. Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel on this month's survey."

The Fabricated Metal Products category, which includes molds/tooling, continues to love the automotive industry. "All auto demand remains strong," commented one respondent. Yet, overall, the Fabricated Metal Products category was 7th in the ordered listing of industries that contracted in December.

The Backlog of Orders PMI improved slightly in December to 48.0% (from 45.0% in November) which is still on the "contracting" side of the benchmark. The Production PMI improved considerably on the expansion side (50 is the benchmark number with above 50 indicating an expansion and below 50 indicating contraction), from 56.6% in November to 59.9% in December. Inventories remained on the contraction side of the PMI, dropping slightly from 48.3 in November to 47.1 in December, showing room for more production and new orders.

Employment jumped 3.3% in December to 55.1% from 51.8% in November, something that bodes well for that category.