Manufacturing Sector Expansion Continues in January - Modern Distribution Management

Manufacturing Sector Expansion Continues in January

PMI down 1.6 percent, but growth continues for 20th consecutive month.

The manufacturing sector expanded in January, according to supply executives in the latest Manufacturing ISM Report on Business. The January PMI was 53.5 percent, 1.6 percentage points lower than December's 55.1 percent.

The New Orders Index registered 52.9 percent, a decrease of 4.9 percentage points from December. The Production Index registered 56.5 percent, 1.2 percentage points below December.

The Employment Index of 54.1 percent decreased 1.9 percent from December's 56 percent. Inventories of raw materials registered 51 percent, up 5.5 percentage point from the December reading of 45.5 percent.

A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

"Comments from the panel indicate that most industries, but not all, are experiencing strong demand as 2015 kicks off. The West Coast dock slowdown continues to be a problem, negatively impacting both exports and imports as well as inventories," said Bradley Holcomb, chairman of the Institute for Supply Management Manufacturing Business Survey committee.

Of the 18 manufacturing industries, 14 are reporting growth in January in the following order: Primary Metals; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; Chemical Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Furniture & Related Products.

The two industries reporting contraction in January are: Textile Mills and Nonmetallic Mineral Products.

“The January ISM report is neither good nor bad but lukewarm,” said Daniel J. Meckstroth, chief economist, Manufacturers Alliance for Productivity and Innovation. “Manufacturing production was exceptionally strong in the fourth quarter (5.2 percent growth in manufacturing industrial production), with the overall economy decelerating from growth of 5 percent in the third quarter to 2.6 percent in the fourth quarter. Manufacturing activity is now shifting to a slower, more sustainable rate of growth.”

For more information, visit www.ism.ws.

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