U.S. Manufacturing Sector Expands in December

January 03, 2013, 07:58 AM

Filed Under: Economy

Related: Economic Data, Economic Indicator, Economy, Institute for Supply Management, ISM, Manufacturing Data, Manufacturing ISM Report, Manufacturing Sector

Economic activity in the manufacturing sector expanded in December, following one month of contraction, and the overall economy grew for the 43rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee.

"The PMI™ registered 50.7 percent, an increase of 1.2 percentage points from November's reading of 49.5 percent, indicating expansion in manufacturing for only the third time in the last seven months. This month's PMI™ reading moved manufacturing off its low point for 2012 in November. The New Orders Index remained at 50.3 percent, the same rate as in November, indicating growth in new orders for the fourth consecutive month. The Production Index registered 52.6 percent, a decrease of 1.1 percentage points, indicating growth in production for the third consecutive month. The Employment Index registered 52.7 percent, an increase of 4.3 percentage points, indicating a resumption of growth in employment following only one month of contraction since September 2009. Both the Exports and Imports Indexes registered 51.5 percent, returning both indexes to growth territory following consecutive periods of contraction of six and four months, respectively. Comments from the panel this month are mixed, with some indicating a strengthening of demand and others indicating a continuing softness in demand. Additionally, many respondents express uncertainty about government regulations, taxes and global economics in general as we approach 2013."

Performance by Industry

Of the 18 manufacturing industries, seven are reporting growth in December in the following order:

Furniture & Related Products
Paper Products
Petroleum & Coal Products
Wood Products
Primary Metals
Computer & Electronic Products
Food, Beverage & Tobacco Products

The nine industries reporting contraction in December — listed in order — are:

Nonmetallic Mineral Products
Chemical Products
Miscellaneous Manufacturing
Plastics & Rubber Products
Fabricated Metal Products
Transportation Equipment
Machinery
Electrical Equipment, Appliances & Components
Apparel, Leather & Allied Products

What respondents are saying…

"Many Chinese sources are coming to us with cost reductions to maintain their current business volumes." (Machinery)

"Saw some stronger than expected demand in October and November, but December demand is weak comparatively." (Food, Beverage & Tobacco Products)

"We are seeing stabilization of orders and costs as well as production capacity for the first time in months." (Miscellaneous Manufacturing)

"We are experiencing a mix of results — domestic up year over year for industrial business, down in retail and down in LATAM, EU and Asia. Next year is anyone's guess — has never been so unpredictable." (Apparel, Leather & Allied Products)

"Black Friday was good, but forward economic visibility is foggy." (Computer & Electronic Products)

"The election is over; unemployment is dropping; consumer confidence is increasing as are home sales prices. We seem to be turning the corner. New car sales are increasing, which affects our customers." (Fabricated Metal Products)

"Business conditions have flattened out since last month. Overall production has leveled off from their previous reduction last month." (Transportation Equipment)