Economy

ISM PMI Records 7th Consecutive Month of Expansion in Manufacturing

January 2, 2014

Manufacturing activity expanded in December for the seventh consecutive month and rose to its second highest reading of 2013. The PMI (purchasing managers index) registered 57 percent according to the December 2013 ISM Manufacturing Report on Business.

New orders, employment, supplier deliveries and prices all grew at a faster rate in December. New Orders increased 0.6 percent to 64.2 percent. The employment index, at 56.9 percent, was at its highest level since June 2011.

Production decreased by 0.6 percentage points to 62.2 in December indicating a somewhat slower rate than November. Inventories contracted 3.5 percentage points to a reading of 47 from 50.5 reported last month. Customer inventories increased 2.5 points to register at 47.5 percent.

Prices rose 1 percentage point to 53.5 indicating an increase in raw materials prices for the fifth consecutive month. Commodities reported up in price included #1 busheling scrap; galvanized steel; stainless steel; steel; Steel—HRPO; and Steel—Hot Rolled (up for the second month in a row). Aluminum and fuel were among those commodities that have dropped in price.

Backlogs decreased 2.5 percentage points to 51.5 percent in December.

Exports grew at a slower rate dropping 4.5 percentage points to 55.0 in December. Imports remained the same at 55.0.

Comments relative to the steel industry included:

“Largest backlog ever. Most orders waiting on customer approvals.” (Fabricated Metal Products)
“Construction equipment market continues to be flat with some signs of improvement on the horizon.” (Machinery)
“Continued government spending constraints keeping production volumes low.” (Transportation Equipment)

An interactive graph of the ISM history is below. Note that this interactive graph will only display when this article is read on the Steel Market Update website.

{amchart id=”116″ ISM Manufacturing Report on Business PMI History}