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December 2007 Manufacturing ISM Report On Business®
PMI at 47.7%
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of December 2007.
New Orders, Production, Employment and Inventories Contracting
Supplier Deliveries Slowing
Supplier Deliveries Slowing
(Tempe, Arizona) — Economic activity in the manufacturing sector failed to grow in December following 10 consecutive months of expansion, while the overall economy grew for the 74th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The manufacturing sector failed to grow in December ending 10 consecutive months of growth. The recent trend has been toward slower growth. However, December was apparently a very tough month as New Orders, Production and Employment were all below the break-even mark of 50 percent. Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better. Slower demand appears to be more of a problem than excessive inventories based on the respondents' comments."
TOP PERFORMING INDUSTRIES
The seven industries reporting growth in December — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Primary Metals; and Miscellaneous Manufacturing.
WHAT RESPONDENTS ARE SAYING ...
- "Have received a large volume of price increase notices in the last month with increases between 3 percent to as much as 15 percent." (Chemical Products)
- "Business is good, but higher raw material prices are squeezing margins." (Primary Metals)
- "The heavy truck industry is not recovering as expected. The latest forecast does not show an increase in orders until Q3 2008." (Fabricated Metal Products)
- "General business conditions are slow." (Paper Products)
- "Upward price of raw materials, plus low inventories, is pushing price of resins skyward." (Plastics & Rubber Products)
|
MANUFACTURING AT A GLANCE
DECEMBER 2007 | ||||||
|
Index |
Series
Index December |
Series
Index November |
Percentage
Point Change |
Direction |
Rate
of Change |
Trend* (Months) |
|
PMI
|
47.7
|
50.8
|
-3.1
|
Contracting
|
From Growing
|
1
|
|
New Orders
|
45.7
|
52.6
|
-6.9
|
Contracting
|
From Growing
|
1
|
|
Production
|
47.3
|
51.9
|
-4.6
|
Contracting
|
From Growing
|
1
|
|
Employment
|
48.0
|
47.8
|
+0.2
|
Contracting
|
Slower
|
2
|
|
Supplier Deliveries
|
53.3
|
51.7
|
+1.6
|
Slowing
|
Faster
|
4
|
|
Inventories
|
45.5
|
46.9
|
-1.4
|
Contracting
|
Faster
|
17
|
|
Customers' Inventories
|
51.5
|
49.0
|
+2.5
|
Too High
|
From Too Low
|
1
|
|
Prices
|
68.0
|
67.5
|
+0.5
|
Increasing
|
Faster
|
12
|
|
Backlog of Orders
|
43.0
|
41.5
|
+1.5
|
Contracting
|
Slower
|
3
|
|
Exports
|
52.5
|
58.5
|
-6.0
|
Growing
|
Slower
|
61
|
|
Imports
|
48.0
|
47.5
|
+0.5
|
Contracting
|
Slower
|
3
|
|
|
|
|
|
|
|
|
|
OVERALL ECONOMY
|
Growing
|
Slower
|
74
| |||
|
Manufacturing Sector
|
Contracting
|
From Growing
|
1
| |||
*Number of months moving in current direction
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Caustic Soda (3); Corn-based Products; Corrugated Containers (4); Diesel Fuel; Fuel Surcharges; Gasoline (2); Methanol (3); Natural Gas (2); Oil (2); Packaging (2); Plastic Products (2); Polypropylene Resin (2); Stainless Steel; Steel; and Sulfuric Acid (2).
Commodities Down in Price
No commodities are reported down in price.
Commodities in Short Supply
No commodities are reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
DECEMBER 2007 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing failed to grow in December as the PMI registered 47.7 percent, a decrease of 3.1 percentage points when compared to November's reading of 50.8 percent. This is the first month that the manufacturing sector has failed to grow since January 2007. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that the overall economy is growing while the manufacturing sector is contracting. "The past relationship between the PMI and the overall economy indicates that the PMI average for January through December (52.2 percent) corresponds to a 3.2 percent increase in real gross domestic product (GDP) annually. In addition, if the PMI for December (47.7 percent) is annualized, it corresponds to a 1.8 percent increase in real GDP annually."
THE LAST 12 MONTHS
|
Month
|
PMI
|
|
Month
|
PMI
|
|
Dec 2007
|
47.7
|
|
Jun 2007
|
56.0
|
|
Nov 2007
|
50.8
|
|
May 2007
|
55.0
|
|
Oct 2007
|
50.9
|
|
Apr 2007
|
54.7
|
|
Sep 2007
|
52.0
|
|
Mar 2007
|
50.9
|
|
Aug 2007
|
52.9
|
|
Feb 2007
|
52.3
|
|
Jul 2007
|
53.8
|
|
Jan 2007
|
49.3
|
|
Average for 12 months – 52.2
High – 56.0 Low – 47.7 | ||||
New Orders
ISM's New Orders Index registered 45.7 percent in December. The index is 6.9 percentage points lower than the 52.6 percent reported in November. A New Orders Index above 49.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
Five industries reported increases during December: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Primary Metals.
|
New
Orders |
%
Better |
%
Same |
%
Worse |
Net |
Index |
|
Dec 2007
|
15
|
55
|
30
|
-15
|
45.7
|
|
Nov 2007
|
27
|
46
|
27
|
0
|
52.6
|
|
Oct 2007
|
18
|
64
|
18
|
0
|
52.5
|
|
Sep 2007
|
29
|
51
|
20
|
+9
|
53.4
|
Production
ISM's Production Index fell to 47.3 percent in December, a decrease of 4.6 percentage points when compared to November's reading of 51.9 percent. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.
Of the industries reporting in December, eight registered growth: Apparel, Leather & Allied Products; Petroleum & Coal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Paper Products; Machinery; Miscellaneous Manufacturing; and Primary Metals.
|
Production |
%
Better |
%
Same |
%
Worse |
Net |
Index |
|
Dec 2007
|
16
|
58
|
26
|
-10
|
47.3
|
|
Nov 2007
|
23
|
55
|
22
|
+1
|
51.9
|
|
Oct 2007
|
18
|
60
|
22
|
-4
|
49.6
|
|
Sep 2007
|
31
|
53
|
16
|
+15
|
54.6
|
Employment
ISM's Employment Index registered 48 percent in December, which is an increase of 0.2 percentage point when compared to November's reading of 47.8 percent. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
The five industries reporting growth in employment during December are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Machinery; Food, Beverage & Tobacco Products; and Chemical Products.
|
Employment |
%
Higher |
%
Same |
%
Lower |
Net |
Index |
|
Dec 2007
|
11
|
71
|
18
|
-7
|
48.0
|
|
Nov 2007
|
14
|
67
|
19
|
-5
|
47.8
|
|
Oct 2007
|
17
|
66
|
17
|
0
|
52.0
|
|
Sep 2007
|
14
|
72
|
14
|
0
|
51.7
|
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations continued to slow in December as the Supplier Deliveries Index increased 1.6 percentage points to 53.3 percent. A reading above 50 percent indicates slower deliveries.
The five industries reporting slower supplier deliveries in December are: Printing & Related Support Activities; Chemical Products; Computer & Electronic Products; Fabricated Metal Products; and Primary Metals.
|
Supplier
Deliveries |
%
Slower |
%
Same |
%
Faster |
Net |
Index |
|
Dec 2007
|
8
|
88
|
4
|
+4
|
53.3
|
|
Nov 2007
|
5
|
92
|
3
|
+2
|
51.7
|
|
Oct 2007
|
7
|
87
|
6
|
+1
|
50.6
|
|
Sep 2007
|
8
|
88
|
4
|
+4
|
51.9
|
Inventories
Manufacturers' inventories contracted again in December as the Inventories Index registered 45.5 percent, which is 1.4 percentage points lower than November's reading of 46.9 percent. This is the 17th consecutive month of inventory liquidation. An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
The four industries reporting higher inventories in December are: Wood Products; Primary Metals; Transportation Equipment; and Computer & Electronic Products.
|
Inventories |
%
Higher |
%
Same |
%
Lower |
Net |
Index |
|
Dec 2007
|
16
|
57
|
27
|
-11
|
45.5
|
|
Nov 2007
|
18
|
55
|
27
|
-9
|
46.9
|
|
Oct 2007
|
17
|
57
|
26
|
-9
|
47.2
|
|
Sep 2007
|
13
|
57
|
30
|
-17
|
41.6
|
Customers' Inventories*
The ISM Customers' Inventories Index registered 51.5 percent in December, an increase of 2.5 percentage points when compared to November. The index indicates that respondents believe their customers' inventories are too high at this time.
Eight industries reported higher customers' inventories during December: Plastics & Rubber Products; Textile Mills; Paper Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Nonmetallic Mineral Products; Fabricated Metal Products; and Chemical Products.
|
Customers'
Inventories |
%
Reporting |
%Too
High |
%About
Right |
%Too
Low |
Net |
Index |
|
Dec 2007
|
75
|
20
|
63< |