December 2020 Manufacturing ISM Report On Business Has Four of Five Indices In Strong Growth Territory

By Steve Clouther

Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Manufacturing ISM ReportEconomic activity in the manufacturing sector grew in December, with the overall economy notching an eighth consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing grew in December, as the Manufacturing PMI registered 60.7 percent, 3.2 percentage points higher than the November reading of 57.5 percent. This signaled a continued rebuilding of economic activity in December, with four of five contributing subindexes in strong growth territory.

ISM’s New Orders Index registered 67.9 percent in December, an increase of 2.8 percentage points compared to the 65.1 percent reported in November.  This indicates that new orders grew for the seventh consecutive month and the sixth consecutive month above 60 percent.

The Production Index registered 64.8 percent in December, 4 percentage points above the November reading of 60.8 percent, indicating growth for the seventh consecutive month and the sixth straight month above 60 percent.  This is the highest reading since January 2011, when the index registered 65.3 percent.

ISM’s Employment Index registered 51.5 percent in December, 3.1 percentage points higher than the November reading of 48.4 percent.  Following one month of contraction, the Employment Index moved back into expansion territory.

The delivery performance of suppliers to manufacturing organizations was slower in December, as the Supplier Deliveries Index registered 67.6 percent.  This is 5.9 percentage points higher than the 61.7 percent reported in November.  Suppliers continue to struggle to deliver, with deliveries slowing at a faster rate compared to November.

The Inventories Index registered 51.6 percent in December, 0.4 percentage point higher than the 51.2 percent reported for November.  Inventories grew for a third consecutive month after three months of contraction.

ISM’s Backlog of Orders Index registered 59.1 percent in December, a 2.2-percentage point increase compared to the 56.9 percent reported in November, indicating order backlogs expanded for the sixth consecutive month.

Of the 18 manufacturing industries, 16 reported growth in December, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Wood Products; Fabricated Metal Products; Machinery; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Paper Products; Chemical Products; Petroleum & Coal Products; Primary Metals; Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.  The two industries reporting contraction in December are: Printing & Related Support Activities; and Nonmetallic Mineral Products.

Engage with ARC Advisory Group