PMI breaks 3-year string of growth

The Institute for Supply Management’s Report on Business for Manufacturing dipped below 50% for the first time in almost three years — as reported at:
The highly respected index dropped from 53.5% to 49.7% — “indicating contraction in the manufacturing sector for the first time since July 2009.”
The new orders index also plummeted 12.5 percentage points to 47.8%.
In many ways, the news of the drop is not so remarkable as the strength of U.S. manufacturing for three straight years. It was a powerful engine that was pulling our economy along in spite of obstacles from all over the world that were thrown on its tracks. Now, finally, European debt woes, angst about China and other bad news has finally raised enough signal flags to slow down the train.
What this means for the future is still uncertain, but from my own practice, I do sense that old notions about business cycles aren’t relevant any more. Instead of simple “boom or bust” tactics, companies have recognized they need continuous improvement in the way they manage their supply chains. If this no-growth/slow-growth state is going to stick with us, supply managers are under steady pressure to drive cost improvements through to the bottom line.
To do that the CPO needs a deep pool of talent to manage the process. We are seeing continual transformation taking place.


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