ISM: 5th Straight Month of Growth for Manufacturing

The Institute for Supply Management (ISM) has reported December showed the fifth straight month of manufacturing sector growth, hitting a high not seen since before the recession.

Sean Murphy -- Supply Chain Management Review, 1/4/2010

For the fifth straight month, the manufacturing sector has shown signs of growth, according to the latest monthly report on the sector from the Institute for Supply Management (ISM).

The report, which tracked 18 manufacturing industries in December, shows the index ISM uses to monitor the sector, or PMI, at 55.9 percent. A level above 50 percent indicates growth. December's PMI is the highest the index has been since April of 2006, when it hit 56 percent, according to Norbert Ore, chair of ISM's manufacturing business survey committee.

"I think it was a good month," he said.

In addition to the PMI, other supporting indices, such as new orders, production, and prices, all registered above 60 percent in December, with new orders hitting 65.5 percent.

Since mid-2009, Ore and ISM have predicted manufacturing numbers would climb above 50 percent, and continue to show growth throughout 2010.

Still, the economy has a ways to go, Ore said. Employment, while technically in the "improvement" stage at 52 percent in December, always lags behind other indices, and thus hiring, while on the increase, won't pick up tangible speed anytime soon, Ore said.

Also, despite the overall growth in the sector, only half of the 18 surveyed industries officially reported growth in December.

"If you were one of the nine industries not experiencing growth, you wouldn't be so quick to celebrate," he said.

Ore said indices indicating growth will remain in growth territory above 50 percent, but some indices, like new orders, Ore said, will likely "back off a little bit.".

Ore said he also expects the PMI to slip backward a bit, though not far enough to fall below 50.

"We won't make it back to 55.9 very soon," he said.

ISM's exports and imports indices, Ore said, also remain in growth territory, at 54.5 and 55 percent, respectively. That's a good sign, Ore said, particularly for imports, because it probably means companies are importing more parts and raw materials for assembly here in the U.S., suggesting an uptick in manufacturing.

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