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PMI slips, but overall manufacturing growth remains solid

Manufacturing index slides to 59.8% in September as impact of tariffs take center stage.

Bob Vavra, CFE Media
10/01/2018
PMI slips, but overall manufacturing growth remains solid

Courtesy: Bob VavraManufacturing's long winning streak continued in September as the Institute for Supply Management's (ISM's) monthly purchasing manufacturers' index (PMI) continued to hover at the 20% growth rate.

Even as the PMI fell 1.5 percentage points in September to 59.8%, the index is significantly above the 50.0% break-even level for the index and remained at a growth rate of almost 20% (60.0% PMI) for the year."

Comments from the panel reflect continued expanding business strength," said Timothy R. Fiore, chairman of the ISM's Manufacturing Business Survey Committee. "Demand remains strong, with the New Orders Index at 60% or above for the 17th straight month, and the Customers' Inventories Index remaining low."

While a proposed agreement on a new version of the North America Free Trade Agreement (NAFTA) was announced Oct. 1, members of the committee remained concerned by trade issues, Fiore said. "Export orders expanded, but four major industries are no longer contributing. Price pressure continues, but the index softened for the fourth straight month and dropped below 70% for the first time since December 2017," Fiore said. "Demand remains robust, but employment resources and supply chains continue to struggle, but to a lesser degree. Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations." Among the comments from committee members:

The economy remained on a 9-plus year winning streak, which is a PMI above 43.2%. The overall index remained above the 50% growth rate for the 33rd straight month.

Bob Vavra, content manager, CFE Media, bvavra(at)cfemedia.com.

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