PMI at 53.2%; November Manufacturing ISM Report on Business

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Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 90th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The November PMI® registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent. The New Orders Index registered 53 percent, an increase of 0.9 percentage point from the October reading of 52.1 percent. The Production Index registered 56 percent, 1.4 percentage points higher than the October reading of 54.6 percent. The Employment Index registered 52.3 percent, a decrease of 0.6 percentage point from the October reading of 52.9 percent. Inventories of raw materials registered 49 percent, an increase of 1.5 percentage points from the October reading of 47.5 percent. The Prices Index registered 54.5 percent in November, the same reading as in October, indicating higher raw materials prices for the ninth consecutive month. Comments from the panel cite increasing demand, some tightness in the labor market and plans to reduce inventory by the end of the year."

November 2016 Manufacturing Index Summaries

PMI

Manufacturing expanded in November as the PMI registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent, indicating growth in manufacturing for the third consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 43.2 percent, over a period, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates growth for the 90th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the third consecutive month. Holcomb stated, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through November (51.2 percent) corresponds to a 2.5 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for November (53.2 percent) is annualized, it corresponds to a 3.2 percent increase in real GDP annually."

New Orders

ISM®'s New Orders Index registered 53 percent in November, which is an increase of 0.9 percentage point when compared to the 52.1 percent reported for October, indicating growth in new orders for the third consecutive month. 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 nine industries reporting growth in new orders in November — listed in order — are: Petroleum & Coal Products; Miscellaneous Manufacturing; Textile Mills; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Machinery; and Primary Metals. The nine industries reporting a decrease in new orders during November — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Fabricated Metal Products; Transportation Equipment; and Plastics & Rubber Products.

Production

ISM®'s Production Index registered 56 percent in November, which is an increase of 1.4 percentage points when compared to the 54.6 percent reported for October, indicating growth in production for the third consecutive month. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The nine industries reporting growth in production during the month of November — listed in order — are: Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; Textile Mills; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; and Machinery. The six industries reporting a decrease in production during November — listed in order — are: Printing & Related Support Activities; Transportation Equipment; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.

Employment

ISM®'s Employment Index registered 52.3 percent in November, a decrease of 0.6 percentage point when compared to the October reading of 52.9 percent, indicating growth in employment in November for the second consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the seven industries reporting employment growth in November — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Paper Products; Computer & Electronic Products; Primary Metals; and Machinery. The nine industries reporting a decrease in employment in November — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Chemical Products; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components.