PERFORMANCE BY INDUSTRY
Of the 18 manufacturing industries, 14 are reporting growth in May, in the following order: Nonmetallic Mineral Products; Petroleum & Coal Products; Machinery; Transportation Equipment; Computer & Electronic Products; Textile Mills; Electrical Equipment, Appliances & Components; Primary Metals; Miscellaneous Manufacturing; Paper Products; Chemical Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; and Fabricated Metal Products. The three industries reporting contraction in May are: Printing & Related Support Activities; Furniture & Related Products; and Food, Beverage & Tobacco Products.
WHAT RESPONDENTS ARE SAYING …
“Chemical prices are under increasing cost pressure, driven by feedstock and transportation costs.” (Chemical Products)
“Continued growth through beginning of second quarter, with strong backlog and outlook for at least the next three months.” (Electrical Equipment, Appliances & Components)
“Business levels remain strong — better than last year by 20+ percent, but not back to 2008 or early 2009 levels.” (Fabricated Metal Products)
“
"Demand remains strong; however, inflation is evident everywhere in virtually every material purchased.” (Paper Products)
“Bad weather is impacting retail business.” (Printing & Related Support Activities)
“Business is still strong, but we are more aware of a possible softening than previously.” (Machinery)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Adhesives; Aluminum (9); Aluminum Products (5); Brass Products; Butadiene; Caustic Soda (3); Chemicals (3); Cocoa/Cocoa Powder (4); Copper(b) (10); Copper Based Products (7); Diesel (6); Electric/Electronic Components (3); Foam; Fuel Oils (5); Fuel Surcharges (3); Gasoline; Glycol Ether; High Density Polyethylene (3); Nickel Products; Oils and Lubricants (2); Packaging Materials; Paper; Petroleum Based Products; Plastics (5); Plastic Products (5); Polypropylene (5); Polypropylene Resins; Propylene Glycol; Resins (3); Rubber Products (4); Shrink Wrap Film; Silver (3); Stainless Steel (7); Steel(b) (9); Steel — Cold Rolled (2); Steel Products (6); and Titanium Dioxide (2).
Commodities Down in Price
Copper(b); and Steel(b).
Commodities in Short Supply
Electric/Electronic Components (5); Nylon/Nylon Polymer; Resins; Rubber Products; and Titanium Dioxide (3).
Note: The number of consecutive months the commodity is listed is indicated after each item.
(b) Reported as both up and down in price.
MAY 2011 MANUFACTURING INDEX SUMMARIES
PMI
Manufacturing continued its growth in May as the PMI registered 53.5 percent, a decrease of 6.9 percentage points when compared to April’s reading of 60.4 percent. 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 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 24th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 22nd consecutive month. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through May (59.5 percent) corresponds to a 5.9 percent increase in real gross domestic product (GDP). In addition, if the PMI for May (53.5 percent) is annualized, it corresponds to a 3.8 percent increase in real GDP annually.”
New Orders
ISM’s New Orders Index registered 51 percent in May, which is a decrease of 10.7 percentage points when compared to the 61.7 percent reported in April. This is the 23rd consecutive month of growth in the New Orders Index. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
The 11 industries reporting growth in new orders in May — listed in order — are: Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Transportation Equipment; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Miscellaneous Manufacturing; Chemical Products; Machinery; and Fabricated Metal Products. The four industries reporting decreases in new orders in May are: Furniture & Related Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
Production
ISM’s Production Index registered 54 percent in May, which is a decrease of 9.8 percentage points when compared to the April reading of 63.8 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the 24th consecutive month the Production Index has registered above 50 percent.
The 12 industries reporting growth in production during the month of May — listed in order — are: Plastics & Rubber Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Machinery; Primary Metals; Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; and Computer & Electronic Products. The four industries reporting a decrease in production in May are: Furniture & Related Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Chemical Products.
Employment
ISM’s Employment Index registered 58.2 percent in May, which is 4.5 percentage points lower than the 62.7 percent reported in April. This is the 20th consecutive month of growth in manufacturing employment. An Employment Index above 50.1 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, 11 reported growth in employment in May in the following order: Textile Mills; Nonmetallic Mineral Products; Computer & Electronic Products; Transportation Equipment; Machinery; Primary Metals; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Chemical Products; and Fabricated Metal Products. The two industries reporting a decrease in employment are: Electrical Equipment, Appliances & Components; and Petroleum & Coal Products. Five industries reported no change in employment in May compared to April.
Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in May as the Supplier Deliveries Index registered 55.7 percent, which is 4.5 percentage points lower than the 60.2 percent registered in April. This is the 24th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.
The seven industries reporting slower supplier deliveries in May — listed in order — are: Textile Mills; Machinery; Chemical Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Miscellaneous Manufacturing. The four industries reporting faster deliveries in May are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Plastics & Rubber Products; and Fabricated Metal Products.
Inventories
Manufacturers’ inventories contracted in May for the third time in the past four months. The Inventories Index registered 48.7 percent, 4.9 percentage points lower than the 53.6 percent reported in April. An Inventories Index greater than 42.7 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 three industries reporting higher inventories in May are: Computer & Electronic Products; Miscellaneous Manufacturing; and Machinery. The 10 industries reporting decreases in inventories in May — listed in order — are: Textile Mills; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Apparel, Leather & Allied Products.
Customers’ Inventories(c)
The ISM Customers’ Inventories Index registered 39.5 percent in May, 1 percentage point lower than in April when the index registered 40.5 percent. This is the 26th consecutive month the Customers’ Inventories Index has been below 50 percent, indicating that respondents believe their customers’ inventories are too low at this time.
The only manufacturing industry reporting customers’ inventories as being too high during May is Food, Beverage & Tobacco Products. The 10 industries reporting customers’ inventories as too low during May — listed in order — are: Plastics & Rubber Products; Primary Metals; Textile Mills; Computer & Electronic Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Machinery; Chemical Products; Electrical Equipment, Appliances & Components; and Transportation Equipment. Seven industries reported no change in customers’ inventories for the month of May compared to April.
Prices(c)
The ISM Prices Index registered 76.5 percent in May, 9 percentage points lower than the 85.5 percent reported in April. This is the first time the Prices Index has registered below 80 percent since December 2010, and is the 23rd consecutive month the index has registered above 50 percent. While 58 percent of respondents reported paying higher prices and 5 percent reported paying lower prices, 37 percent of supply executives reported paying the same prices as in April. A Prices Index above 49.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
Of the 18 manufacturing industries, 15 report paying increased prices during the month of May, in the following order: Nonmetallic Mineral Products; Chemical Products; Paper Products; Machinery; Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Textile Mills; Plastics & Rubber Products; Transportation Equipment; Petroleum & Coal Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. No manufacturing industry reported paying lower prices on average in May.
Backlog of Orders(c)
ISM’s Backlog of Orders Index registered 50.5 percent in May, which is 10.5 percentage points lower than the 61 percent reported in April. Of the 85 percent of respondents who reported their backlog of orders, 21 percent reported greater backlogs, 20 percent reported smaller backlogs, and 59 percent reported no change from April.
The five industries reporting increased order backlogs in May are: Primary Metals; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; and Transportation Equipment. The seven industries reporting decreases in order backlogs during May — listed in order — are: Miscellaneous Manufacturing; Furniture & Related Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Printing & Related Support Activities; Fabricated Metal Products; and Computer & Electronic Products. Six industries reported no change in order backlogs in May compared to April.
New Export Orders(c)
ISM’s New Export Orders Index registered 55 percent in May, which is 7 percentage points lower than the 62 percent reported in April. This is the 23rd consecutive month of growth in the New Export Orders Index.
The eight industries reporting growth in new export orders in May — listed in order — are: Paper Products; Petroleum & Coal Products; Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Chemical Products; and Machinery. The three industries reporting a decrease in new export orders during May are: Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. Six industries reported no change in exports in May compared to April.
Imports(c)
Imports of materials by manufacturers continued to expand in May as the Imports Index registered 54.5 percent, 1 percentage point lower than the 55.5 percentage points reported in April. This is the 21st consecutive month of growth in imports.
The nine industries reporting growth in imports during the month of May — listed in order — are: Petroleum & Coal Products; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Miscellaneous Manufacturing; Machinery; Transportation Equipment; Chemical Products; and Fabricated Metal Products. The only industry reporting a decrease in imports during May is Plastics & Rubber Products. Eight industries reported no change in imports in May compared to April.
Buying Policy
Average commitment lead time for Capital Expenditures decreased 4 days to 104 days. Average lead time for Production Materials increased 2 days to 61 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 5 days to 28 days.
