-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueComing to Terms With AI
In this issue, we examine the profound effect artificial intelligence and machine learning are having on manufacturing and business processes. We follow technology, innovation, and money as automation becomes the new key indicator of growth in our industry.
Box Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
June ISM Manufacturing Report for Electronics
July 2, 2009 |Estimated reading time: 5 minutes
The Institute of Supply Management (ISM) June Manufacturing Report On Business came out this week, surveying all kinds of manufacturing sectors to provide an overview of new orders, inventories, and the purchasing managers' index (PMI), among other economic indicators. Here are the key points in ISM's report for electronics manufacturing sectors.
Economic activity in the manufacturing sector failed to grow in June for the 17th consecutive month, while the overall economy grew for the second consecutive month following seven months of decline, Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee, reported. Ore added that the Production Index is up 12.1 percentage points in the last two months to 52.5%. Aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries. The Prices Index was unchanged from May, indicating that the supply/demand balance is improving. Overall, a slow recovery for manufacturing is forming based on the current trends in the ISM data.
Computer & electronic products, electrical equipment, and related electronics sectors like transportation and appliances all reported contraction in June. ISM quotes a respondent in the computer/electronics sector as saying that "...a lot of people are requoting old business and using favorable pricing to negotiate with their current suppliers."
Prices rose for aluminum, copper, and plastics, though no commodities are reported as being in short supply.
Manufacturing contracted at a slower rate in June as the PMI registered 44.8%, which is 2 percentage points higher than the 42.8% reported in May. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting. A PMI in excess of 41.2%, over a period of time, generally indicates an expansion of the overall economy.
New Orders ISM's New Orders Index registered 49.2% in June, 1.9 percentage points lower than the 51.1% registered in May. Electronics production supply sectors such as primary metals; plastics & rubber products; fabricated metal products; and chemical products sectors all saw a rise in new orders, though computer & electronic products industries saw a decline.Production ISM's Production Index registered 52.5% in June, which is an increase of 6.5 percentage points from May's reading of 46%. This is the first month the Production Index has moved above 50%, following nine months of contraction.
Electrical equipment, appliances & components; fabricated metal products; and computer & electronic products increased production.
Employment ISM's Employment Index registered 40.7% in June, which is 6.4 percentage points higher than the 34.3% reported in May. This is the 11th consecutive month of decline in employment.
The industries that reported decreases in employment during June included electrical equipment, appliances & components; machinery; primary metals; fabricated metal products; computer & electronic products; chemical products; transportation equipment; plastics & rubber products, and several other non-electronics-related categories.
Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower in June as the Supplier Deliveries Index registered 50.6%, which is 0.8 percentage point higher than the 49.8% registered in May. This is the first month that the Supplier Deliveries Index has been above 50%, following eight months of faster delivery performance. A reading above 50% indicates slower deliveries. Computer & electronics products bucked this trend with faster deliveries in June.
Inventories Manufacturers' inventories contracted in June as the Inventories Index registered 30.8%, which is 2.1 percentage points lower than May's reading of 32.9%. An Inventories Index greater than 42.6%, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
Nearly all industries reported decreases in June, with computer & electronic products showing median decreases.
Customers' Inventories*The ISM Customers' Inventories Index registered 43.5% in June, 2.5 percentage points lower than the 46% reported in May. The index indicates that respondents believe their customers' inventories are too low at this time. This is the third consecutive month the Customers' Inventories Index has been below 50%, following eight months above 50%. Computer & electronic products sectors reported stable customer inventories.
Prices*The ISM Prices Index registered 50% in June, 6.5 percentage points higher than the 43.5% reported in May. Since the index is at the mid-point of 50, this indicates that manufacturers are paying the same prices on average when compared to the previous month. While 22% of respondents reported paying higher prices and 22% reported paying lower prices, 56% of supply executives reported paying the same prices as in May. A Prices Index above 47.6%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The computer & electronic products industry reported paying somewhat lower prices during June.Backlog of Orders*ISM's Backlog of Orders Index registered 47.5% in June, 0.5 percentage point lower than the 48% reported in May. Of the 84% of respondents who reported their backlog of orders, 21% reported greater backlogs, 26% reported smaller backlogs, and 53% reported no change from May. Electrical equipment, appliances & components; transportation equipment; computer & electronic products; and fabricated metal products all reported backlog decreases.
New Export Orders*ISM's New Export Orders Index registered 49.5% in June, 1.5 percentage points higher than the 48% reported in May. This is the ninth consecutive month of contraction in the New Export Orders Index.
The computer & electronic products industry reported decreases in new export orders in June, although electrical equipment new export orders rose. Imports*Imports of materials by manufacturers contracted during June as the Imports Index registered 46%, 3.5 percentage points higher than the 42.5% reported in May. This is the 17th consecutive month of contraction in imports. Only two of the 18 manufacturing industries reported growth in imports during the month of June, including computer & electronic products.
* The Backlog of Orders, Prices, Customers' Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments.
Buying Policy Average commitment lead time for Capital Expenditures decreased 5 days to 106 days. Average lead time for Production Materials increased 1 day to 46 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 1 day to 22 days.
The data presented in ISM's report is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. The Manufacturing ISM Report On Business is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies). For full data, visit www.ism.ws.