February 2018 Manufacturing ISM Report On Business - Slowing Supplier Deliveries Constraining Production Growth

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 expanded in February, and the overall economy grew for the 106th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in February as the PMI registered 60.8 percent, an increase of 1.7 percentage points from the January reading of 59.1 percent. This indicates growth in manufacturing for the 18th consecutive month at strong levels led by continued expansion in new orders, production activity, employment and inventories, with suppliers continuing to struggle delivering to demand.

ISM’s New Orders Index registered 64.2 percent in February, which is a decrease of 1.2 percentage points when compared to the 65.4 percent reported for January, indicating growth in new orders for the 26th consecutive month.

ISM’s Production Index registered 62 percent in February, which is a decrease of 2.5 percentage points when compared to the 64.5 percent reported for January, indicating growth in production for the 18th consecutive month.

ISM’s Employment Index registered 59.7 percent in February, an increase of 5.5 percentage points when compared to the January reading of 54.2 percent. This indicates growth in employment in February for the 17th consecutive month.

The delivery performance of suppliers to manufacturing organizations was slower in February, as the Supplier Deliveries Index registered 61.1 percent. This is 2 percentage points higher than the 59.1 percent reported for January.

The Inventories Index registered 56.7 percent in February, which is an increase of 4.4 percentage points when compared to the 52.3 percent reported for January, indicating raw materials inventories grew in February.

ISM’s Backlog of Orders Index registered 59.8 percent in February, an increase of 3.6 percentage points when compared to the 56.2 percent reported for January, indicating growth in order backlogs for the 13th consecutive month.

Of the 18 manufacturing industries, 15 reported growth in February, in the following order: Printing & Related Support Activities; Primary Metals; Machinery; Computer & Electronic Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Textile Mills; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. Two industries reported contraction during the period: Apparel, Leather & Allied Products; and Furniture & Related Products.