NEW YORK – The overall economy grew for the thirtieth straight time, while the manufacturing sector expanded for the twenty-eighth time, the Institute for Supply Management reported Thursday.
According to the ISM’s monthly report on business, the ISM index climbed to 52.7 in November from 50.8 in October.
Economists polled by Thomson Reuters predicted the index would climb to 52.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The PMI registered 52.7 percent, an increase of 1.9 percentage points from October’s reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. “The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the second month of growth after three months of contraction. While the Prices Index, at 45 percent, increased 4 percentage points from the October reading of 41 percent, prices of raw materials continued to decrease (registering below 50 percent) for the second consecutive month. Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders.”
The closely watched prices paid index jumped to 45.0 from 41.0. The employment index was at 51.8, off from 53.5 the prior month.
The production index increased to 56.6 from 50.1, the new orders index grew to 56.7 from 52.4; the supplier deliveries index dipped to 49.9 from 51.3; the export orders index increased to 52.0 from 50.0; and the imports index slid to 49.0 from 49.5.
The inventories index grew to 48.3 from 46.7; the customers’ inventories index gained to 50.0 from 43.5; and backlog of orders slumped to 45.0 from 47.5.
Respondents’ comments included:
“Business still holding its own. Some growth in margin now that some of the raw materials prices have abated. Oil is pushing $100 so that has not been favorable.” (Chemical Products)
“Orders for the remaining two months have increased after an extended ‘summer dip’ in sales overall. We expect to finish the year approximately 10 percent above 2010.” (Electrical Equipment, Appliances & Components)
“Seeing a slight slowdown in orders; could be related to the holidays.” (Primary Metals)
“Material lead times are getting longer. Seems like no one is hiring. Trying to do twice the output with the same amount of people.” (Food, Beverage & Tobacco Products)
“Japanese auto production has returned to 100 percent, and domestic manufacturing continues to increase.” (Fabricated Metal Products)
“Oil exploration seems to be really picking up. Government is permitting again, so business is the busiest we’ve ever seen.” (Computer & Electronic Products)
“The EPS ruling about higher fees for coal-generated electricity can have a huge, negative impact on our business if implemented in January 2012. We are at the peak of our seasonal demand push.” (Plastics & Rubber Products)
“Thailand flood impacting our business. Honda and Toyota cut production forecasts, and we are chasing some components made in Thailand.” (Transportation Equipment)
