PMI(R) at 54.7%; December Manufacturing ISM(R) Report On Business(R); New Orders, Production and Employment Growing; Inventories Contracting; Supplier Deliveries Slowing

PR Newswire

TEMPE, Ariz., Jan. 3, 2017

TEMPE, Ariz., Jan. 3, 2017 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 91st consecutive month, say the nation's supply executives in the latest Manufacturing ISM(R) Report On Business(R) .

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management(R) (ISM(R) ) Manufacturing Business Survey Committee. "The December PMI(R) registered 54.7 percent, an increase of 1.5 percentage points from the November reading of 53.2 percent. The New Orders Index registered 60.2 percent, an increase of 7.2 percentage points from the November reading of 53 percent. The Production Index registered 60.3 percent, 4.3 percentage points higher than the November reading of 56 percent. The Employment Index registered 53.1 percent, an increase of 0.8 percentage point from the November reading of 52.3 percent. Inventories of raw materials registered 47 percent, a decrease of 2 percentage points from the November reading of 49 percent. The Prices Index registered 65.5 percent in December, an increase of 11 percentage points from the November reading of 54.5 percent, indicating higher raw materials prices for the 10th consecutive month. The PMI(R) , New Orders, Production and Employment Indexes all registered new highs for the year 2016, and the forward-looking comments from the panel are largely positive."

Of the 18 manufacturing industries, 11 are reporting growth in December in the following order: Petroleum & Coal Products; Primary Metals; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Paper Products; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; and Chemical Products. The six industries reporting contraction in December -- listed in order -- are: Plastics & Rubber Products; Furniture & Related Products; Printing & Related Support Activities; Textile Mills; Nonmetallic Mineral Products; and Transportation Equipment.

WHAT RESPONDENTS ARE SAYING ...

-- "Ramping up for year-end by reducing inventory." (Chemical Products)

-- "Very strong month in terms of booking and billing which will contribute

to a good overall year revenue-wise." (Computer & Electronic Products)-- "Our business remains strong and we are seeing continued growth."

(Plastics & Rubber Products)

-- "We have been fairly steady the last few months and it appears business

is strong into the 1st quarter of next year." (Primary Metals)

-- "Moving into [a] more inflationary environment, with lots of pressure to

increase prices on a number of fronts." (Food, Beverage & Tobacco

Products)

-- "Business continues to be brisk with an uptick of RFQs. Customers are

earmarking funds for capital equipment upgrades." (Machinery)

-- "Hiring still tight on available local labor. Business, by segments,

still uneven. Some consumer markets very (seasonally) strong, but

industrial markets lagging." (Transportation Equipment)

-- "Business conditions are good, demand is growing." (Miscellaneous

Manufacturing)

-- "Continued strong demand for product and strong forecast fornext year."

(Nonmetallic Mineral Products)

-- "December 2016 is way ahead of December 2015." (Fabricated Metal

Products)

MANUFACTURING AT A GLANCE

December 2016

Series Series Percentage

Index Index Point Rate of Trend*

Index Dec Nov Change Direction Change (Months)

PMI(R) 54.7 53.2 +1.5 Growing Faster 4

New Orders 60.2 53.0 +7.2 Growing Faster 4

Production 60.3 56.0 +4.3 Growing Faster 4

Employment 53.1 52.3 +0.8 Growing Faster 3

Supplier

Deliveries 52.9 55.7 -2.8 Slowing Slower 8

Inventories 47.0 49.0 -2.0 Contracting Faster 18

Customers'

Inventories 49.0 49.0 0.0 Too Low Same 3

Prices 65.5 54.5 +11.0 Increasing Faster 10

Backlog ofOrders 49.0 49.0 0.0 Contracting Same 6

New Export

Orders 56.0 52.0 +4.0 Growing Faster 10

Imports 50.5 50.5 0.0 Growing Same 3

OVERALL ECONOMY

Manufacturing Sector Growing Faster 91

Growing Faster 4

Manufacturing ISM(R) Report On Business(R) data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price

Aluminum (2); Brass; #1 Bundle Scrap; #1 Busheling Scrap; Copper (2); Corrugate (3); Corrugated Boxes (2); Methanol (3); Natural Gas; Nickel; Petroleum Fuels; Scrap Steel (2); Stainless Steel (9); Steel (12); Steel -- Carbon Sheet; Steel -- Cold Rolled (2); Steel -- Hot Rolled; and Titanium Dioxide.

Commodities Down in Price

Ethylene; HDPE Resin; and Plastic Resins (2).

Commodities in Short Supply

Electronic Components.

Note: The number of consecutive months the commodity is listed is indicated after each item.

DECEMBER 2016 MANUFACTURING INDEX SUMMARIES

PMI(R) Manufacturing expanded in December as the PMI(R) registered 54.7 percent, an increase of 1.5 percentage points from the November reading of 53.2 percent, indicating growth in manufacturing for the fourth consecutive month and a new high reading for the year. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI(R) above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the December PMI(R) indicates growth for the 91st consecutive month in the overall economy, and indicates growth in the manufacturing sector for the fourth consecutive month. Holcomb stated, "The past relationship between the PMI(R) and the overall economy indicates that the average PMI(R) for January through December (51.5 percent) corresponds to a 2.6 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI(R) for December (54.7 percent) is annualized, it corresponds to a 3.6 percent increase in real GDP annually."

THE LAST 12 MONTHS

Month PMI(R) Month PMI(R)

Dec 2016 54.7 Jun 2016 53.2

Nov 2016 53.2 May 2016 51.3

Oct 2016 51.9 Apr 2016 50.8

Sep 2016 51.5 Mar 2016 51.8

Aug 2016 49.4 Feb 2016 49.5

Jul 2016 52.6 Jan 2016 48.2

Average for 12 months -- 51.5

High -- 54.7

Low -- 48.2

New Orders

ISM(R) 's New Orders Index registered 60.2 percent in December, which is an increase of 7.2 percentage points when compared to the 53 percent reported for November,indicating growth in new orders for the fourth consecutive month and a new high reading for the year. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 12 industries reporting growth in new orders in December -- listed in order -- are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Primary Metals; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; Chemical Products; Fabricated Metal Products; and Transportation Equipment. The four industries reporting a decrease in new orders during December are: Furniture & Related Products; Printing & Related Support Activities; Nonmetallic Mineral Products; and Plastics & Rubber Products.

New Orders %Better %Same %Worse Net Index

Dec 201632 48 20 +12 60.2

Nov 2016 27 51 22 +5 53.0

Oct 2016 24 56 20 +4 52.1

Sep 2016 27 53 20 +7 55.1

Production

ISM(R) 's Production Index registered 60.3 percent in December, which is an increase of 4.3 percentage points when compared to the 56 percent reported for November, indicating growth in production for the fourth consecutive month and a new high reading for the year. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 10 industries reporting growth in production during the month of December -- listed in order -- are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Machinery; Paper Products; Chemical Products; Computer & Electronic Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. The two industries reporting a decrease in production during December are: Nonmetallic Mineral Products; and Transportation Equipment. Six industries reported no change in production in December compared to November.

Production %Better %Same %Worse Net Index

Dec 2016 28 55 17 +11 60.3

Nov 2016 26 57 17 +9 56.0

Oct 2016 25 56 19 +6 54.6

Sep 2016 24 56 20 +4 52.8

Employment

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January 03, 2017 10:15 ET (15:15 GMT)

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