In its latest Manufacturing Report on Business this morning, ISM reported the PMI at 50.7%. That is down from last month, and just barely on the “growth”
side of 50%. According to the release…
Economic activity in the manufacturing sector expanded in April for the fifth consecutive month, and the overall economy grew for the 47th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
It is interesting that the PMI very closely aligns with the results of a non-scientific “flash poll” of ISM members at the organization’s 2013 International Supply Management Conference wrapping up today in Dallas, Texas. They were asked “Which way is the economy headed for the remainder of 2013?” and 64% responded “holding steady,” while 29% responded “turning up.” Only 7% responded “going down.” The conference attendees used a system called ThumbTalk that let them respond by sending a text message or making a choice at a mobile web site.
Shortly after the attendees answered the question live, they heard a semiannual economic forecast from ISM’s Bradley Holcomb and Anthony Nieves, who gave positive outlooks for both manufacturing and non-manufacturing sectors of the economy. (Read them here.) A third economist, Bernard Baumohl, Chief Global Economist, The Economic Outlook Group also forecast growth ahead for the U.S. economy.
Make of this what you will, but I would dare to call it “consensus.” For the moment.
Respondents to the ISM Report on Business in non-manufacturing industries had some alignment to their counterparts in manufacturing last month — as the index dipped 1.6 percentage points, but still remained positive. Here’s the headline. Find the full report on the ISM website.
March Non-Manufacturing ISM Report On Businessâ
NMI™ at 54.4%
Business Activity Index at 56.5%
New Orders Index at 54.6%
Employment Index at 53.3%
(Tempe, Arizona) – Economic activity in the non-manufacturing sector grew in March for the 39th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
For the record, right from the ISM release. PMI™ at 51.3%, so expectations of growth are continuing, although not as strong as last month, when the index was 54.2.
- New Orders, Production and Employment Growing
- Inventories Contracting
- Supplier Deliveries Faster
(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in March for the fourth consecutive month, and the overall economy grew for the 46th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®. (More on the ISM website.)
The ISM Report on Manufacturing showed signs the economy as a whole and manufacturing in particular are continuing to grow at a more-or-less steady pace. The Manufacturing PMI was 51.7, up slightly from last month, an indicator of slightly faster growth. Based on past experience, the PMI data also suggest that the overall U.S. economy has been growing for 37 consecutive months. The same for growth in manufacturing employment.
One would expect that survey respondents would be providing cheery comments to go with those numbers, but consistent with all the uncertainties of these times, the quotes went more like this:
- “The slowing of capital expenditure in Europe and China has lowered our backlog for Q4.” (Computer & Electronic Products)
- “We see a general softening in the steel and automotive markets in the fourth quarter.” (Fabricated Metal Products)
- “Cuts in healthcare reimbursement rates continue to negatively affect top-line revenue.” (Miscellaneous Manufacturing)
- “Sales and order intake have slowed.” (Primary Metals)
- “Europe is still very much a concern. Global recovery is still fragile.” (Chemical Products)
Here’s the summary chart for some of the sections of the report.
A friend of mine visited an upscale suburban mall over the weekend and found the parking lot full and the shoppers lively. The only things missing were lots of bags crammed with merchandise coming out of the stores. In other words, people were having a lot of fun looking, but appeared to be careful about their buying. Based on the latest ISM Manufacturing Report on Business and other indicators — that observation might be a good analogy for the global business climate.
For instance, the ISM ROB for September went positive again — after three months in negative territory. The manufacturing PMI went up to 51.5 — an increase of 1.9 percentage points over the last month. The Non-Manufacturing PMI jumped 1.4 percentage points to 55.1 (Here’s the link to find both reports
From our perspective — that’s a sign that the “shoppers” are out again, but just because they are looking doesn’t mean they all will be buying. There’s still far too much uncertainty for many companies to make firm plans. They are waiting for election returns and Congressional action on the “fiscal cliff” — not to mention a European recession and Chinese economic slowdown.
Consumers uncertain about the economy are saving more than spending, and companies are following a similar course — hoarding cash by meeting slowly growing demand with minimum new investments.
This period of uncertainty and incremental changes up or down may last through the end of the year — or longer. If so, it would be a good time to push through the programs that sometimes get set aside during rapid growth — visiting suppliers, mapping your supply chain deeper than the first tier or two to assess risk, reviewing sustainability or establishing better documentation of the chain of custody. All these things will put you on firmer footing regardless of which way the economy turns.
No big surprise to anyone who has been baking in record temperatures and drought conditions anywhere in the central part of the country, but today’s US Dept. of Agriculture food price forecast projects increases in the range of 2.5 to 3.5 percent for the remainder of 2012, and uncertainty about the full effect of the drought.
If grain or livestock is a category you source, are you prepared for “drought shock?”
How about the short term dip in beef prices as farmers sell off stock rather than pay higher costs for feed?