February 2016 Manufacturing ISM Report On Business Reports Continued Growth with New Orders and Production

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. Economic activity in the manufacturing sector contracted in February for the fifth consecutive month, while the overall economy grew for the 81st consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing contracted in February as the PMI registered 49.5 percent, an increase of 1.3 percentage points from the January reading of 48.2 percent, indicating contraction in manufacturing for the fifth consecutive month.

ISM's New Orders Index registered 51.5 percent in February, the same percentage as registered in January, indicating growth in new orders for the second consecutive month.

ISM's Production Index registered 52.8 percent in February, which is an increase of 2.6 percentage points when compared to the 50.2 percent reported for January, indicating growth in production in February for the second consecutive month.

ISM's Employment Index registered 48.5 percent in February, which is an increase of 2.6 percentage points when compared to the 45.9 percent reported for January, indicating contraction in employment for the third consecutive month, but at a slower rate of contraction than in January.

The delivery performance of suppliers to manufacturing organizations was faster in February as the Supplier Deliveries Index registered 49.7 percent, which is 0.3 percentage point below the 50 percent reported for January.

The Inventories Index registered 45 percent in February, which is an increase of 1.5 percentage points when compared to the 43.5 percent reported for January, indicating raw materials inventories are contracting in February for the eighth consecutive month.

The ISM Prices Index registered 38.5 percent in February, which is an increase of 5 percentage points when compared to the 33.5 percent reported for January, indicating a decrease in raw materials prices for the 16th consecutive month. In February, 9 percent of respondents reported paying higher prices, 32 percent reported paying lower prices, and 59 percent of supply executives reported paying the same prices as in January.

ISM's Backlog of Orders Index registered 48.5 percent in February, an increase of 5.5 percentage points as compared to the January reading of 43 percent, indicating contraction in order backlogs for the ninth consecutive month. Of the 86 percent of respondents who reported their backlog of orders, 19 percent reported greater backlogs, 22 percent reported smaller backlogs, and 59 percent reported no change from January.

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

Keywords: Automation, Manufacturing, Process Industries, Discrete Industries, Supply Management, PMI, ISM, ARC Advisory Group.