Economic activity in the U.S. manufacturing sector expanded in November for the 28th consecutive month, and the overall economy grew for the 30th consecutive month. This according to the Institute of Supply Management’s latest ISM Report On Business.
The November PMI Index registered 52.7 percent, an increase of 1.9 percentage points when compared to October’s reading of 50.8 percent. Note: A reading above 50 percent indicates that the manufacturing economy is generally expanding, while a reading below 50 percent denotes contraction. Annualized, the November PMI Index corresponds to a 3.6 percent increase in real GDP annually, according to Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee.
Following are some highlights from the report:
Sector Activity. Of the 18 manufacturing industries, eight are reporting growth in November, in the following order: Wood Products; Textile Mills; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Apparel, Leather & Allied Products; and Paper Products.
New Orders. ISM's New Orders Index registered 56.7 percent in November, which is an increase of 4.3 percentage points when compared to the October reading of 52.4 percent, and represents a continuation of growth for the second consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
New Export Orders. ISM's New Export Orders Index registered 52 percent in November, which is 2 percentage points higher than the 50 percent reported in October. The New Export Orders Index has registered 50 percent or greater for the past 29 consecutive months.
Production. ISM's Production Index registered 56.6 percent in November, which is an increase of 6.5 percentage points when compared to the October reading of 50.1 percent. This indicates growth for the third consecutive month after just one month of contraction. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.
Inventories. The Inventories Index registered 48.3 percent in November, 1.6 percentage points higher than the 46.7 percent reported in October. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
Despite continued concerns about the general economic environment, government regulations and European financial conditions, many of the respondents to the ISM survey say they are more optimistic (albeit cautiously) about the next few months based on lower raw materials pricing and favorable levels of new orders, Holcomb stated.
The complete November ISM Report On Business is available online.