ISM Manufacturing Index falls into contracting territoryISM Manufacturing Index falls into contracting territory
In spite of all evidence to the contrary, the Institute for Supply Management's (ISM) monthly reports on manufacturing have remained on the "expanding" side of the benchmark in 2015, but that number has finally slipped into "contracting" territory. November's Purchasing Management Index (PMI) registered 48.6%, a decrease of 1.5 points from the October reading of 50.1%.
December 2, 2015
In spite of all evidence to the contrary, the Institute for Supply Management's (ISM) monthly reports on manufacturing have remained on the "expanding" side of the benchmark in 2015, but that number has finally slipped into "contracting" territory. November's Purchasing Management Index (PMI) registered 48.6%, a decrease of 1.5 points from the October reading of 50.1%.
The New Orders Index registered 48.9%, down from 52.9% in October, a significant drop that signals a slow down. Naturally, the Production Index is also down by 3.7%, from 52.9% in October to 49.2% in November. Employment, however, grew from 47.6% in October to 51.3% in November, which seems to be incongruous with the drop in production.
Supplier Deliveries remain in the "slowing" direction, ticking up slightly from 50.4% in October to 50.6% in November. Manufacturer Inventories are contracting, down 3.5% from October's 46.5% to 43.0% in November, while Customer Inventories remain "too high" at 50.5% in November, up 0.5% from October's 51.0%.
The Backlog of Orders Index also remained in "contracting" territory for November at 43.0%, up 0.5% from October's 42.5%.
Only five of the 18 manufacturing industries tracked reported growth in November: Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Transportation Equipment. No raw material commodities were up in price, and none were experiencing a shortage.
Responding to a question about the ISM's PMI during a webinar today, Bill Carteaux, President and CEO of SPI: The Plastics Industry Trade Association, said that the plastics industry is not seeing a "significant slowdown," and projected that 2016 would see continued growth for the industry.
Michael Taylor, Vice President, International Affairs and Trade, noted that the ISM's PMI is a look at a particular industry "in time, not over time." It gauges contraction versus expansion, and "looks at one industry at one moment in time," he explained. "Our [SPI] members are having a difficult time keeping up with demand, and the vast majority of trends in key end markets show growth."
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