The September edition of the Institute for Supply Management’s (ISM) Report on Business showed the Purchasing Manager’s Index (PMI) at 60.8 percent. This change represents a rise of two points from August and is the highest total since May 2004. This reading shows growth in manufacturing for the 13th consecutive month and in the overall economy for the 100th consecutive month.
The average monthly PMI for 2017 sits at 57.1 percent, corresponding to a 4.4 percent increase in annual GDP. More specifically, the report showed:
- The New Orders Index increased 4.3 percent from August to register a 64.6 reading.
- Up 1.2 percent from the previous month, the Production Index came in at 62.2. Both the New Orders and Production Index grew for the 13th consecutive month.
- The Employment Index registered 60.3 percent, up less than half a percent from August. However, this is the 12th consecutive month of employment growth and the highest reading since June 2011.
- The Inventories Index decreased by three percent to 52.5, indicating raw material inventories grew in September and that customers’ inventory levels are still considered too low. ISM feels these inventory levels are indicative of downstream demand exceeding supply.
- The Prices Index was up 9.5 percent, reaching 71.5 in September. This metric means raw material prices increased for the 19th consecutive month and are at their highest level since May 2011. Increased demand, as well as the impact of hurricanes Harvey and Irma, are helping drive demand and higher prices.
- According to ISM, all but one industry segment showed growth in September. In the following order, they included: textiles, machinery, transportation equipment, plastic and rubber products, paper and wood products, electronic products, food, beverage and tobacco, chemical products, fabricated metal products, and petroleum and coal products.
- Helping drive the Prices Index upwards were higher prices for the following commodities: brass, copper, gasoline, nickel, plastic resins, and Stainless Steel. Additional components listed as being in short supply include capacitors, computer memory components, resistors, synthetic fibers, and titanium dioxide.
- The average lead time for capital expenditures declined by one day to 142 days, with average lead time for production materials increasing by one day to 62 days. The average lead time for MRO supplies decreased by one day to 35 days.