August Manufacturing ISM Report On Business(R); PMI at 52.9%; New Orders, Production and Employment Growing; Inventories Contracting.DO NOT CONFUSE con·fuse v. con·fused, con·fus·ing, con·fus·es v.tr. 1. a. To cause to be unable to think with clarity or act with intelligence or understanding; throw off. b. THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of August 2007. TEMPE, Ariz. -- Economic activity in the manufacturing sector expanded in August for the seventh consecutive month, while the overall economy grew for the 70th consecutive month, say the nation's supply executives in the latest Manufacturing ISM See ISM band. Report On Business([R]). The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management[TM] Manufacturing Business Survey Committee. "Viewed from the manufacturing sector, the overall economy continues to grow at a significant rate. In comparing August to July, the rate of growth in manufacturing was slightly less but continues the expansion, although at the slowest pace in the past five months. Both the New Orders Index and the Production Index are encouraging for continuing growth as we head toward the fourth quarter of 2007." TOP PERFORMING INDUSTRIES The 10 industries reporting growth in August -- listed in order -- are: Nonmetallic non·me·tal·lic adj. 1. Not metallic. 2. Chemistry Of, relating to, or being a nonmetal. Adj. 1. Mineral Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Wood Products; Chemical Products; Apparel, Leather & Allied Products; Fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: Metal Products; Textile Mills; Electrical Equipment A piece of electrical equipment is a machine, powered by electricity and usually consists of an enclosure, a variety of electrical components and often a power switch. Examples of Electrical Equipment
WHAT RESPONDENTS In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. ARE SAYING ... * "Business is strong but margins are down due to higher raw material cost." (Primary Metals) * "Business is still off by as much as 40 percent over last year in the building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . industry --residential." (Nonmetallic Mineral Products) * "The Chinese government's recent decision to reduce the export rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. from 13 percent to 5 percent has resulted in higher priced export goods from China." (Plastics & Rubber Products) * "Inventory levels are high at our customers causing slower pulls toward the last quarter of 2007." (Transportation Equipment) * "We are starting to see signs of improvement." (Machinery) [TABLE OMITTED] (a) Number of months moving in current direction COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY Commodities Up in Price Aluminum (9); Copper; Copper Products (5); Eggs; Flour; Freight; Lead; Packaging; Polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n Resins; Polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. Resins; Soybean Oil Soy´bean oil n. 1. an oil obtained from the soybean (Glycine max), rich in protein, fats, sterols, and phospholipids, used as a food and in paints and varnishes and in various industrial applications; - (3); and Steel. Commodities Down in Price Gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by (2); Natural Gas (2); and Nickel nickel, metallic chemical element; symbol Ni; at. no. 28; at. wt. 58.69; m.p. about 1,453°C;; b.p. about 2,732°C;; sp. gr. 8.902 at 25°C;; valence 0, +1, +2, +3, or +4. (2). Commodities in Short Supply Sulfuric Acid sulfuric acid, chemical compound, H2SO4, colorless, odorless, extremely corrosive, oily liquid. It is sometimes called oil of vitriol. Concentrated Sulfuric Acid is the only commodity listed in short supply. Note: The number of consecutive months the commodity is listed is indicated after each item. AUGUST 2007 MANUFACTURING INDEX SUMMARIES PMI See Private Mortgage Insurance. Manufacturing grew at a slower rate in August as the PMI registered 52.9 percent, a decrease of 0.9 percentage point when compared to July's reading of 53.8 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that both the overall economy and the manufacturing sector are growing. "The past relationship between the PMI and the overall economy indicates that the PMI average for January through August (53.1 percent) corresponds to a 3.5 percent increase in real gross domestic product (GDP GDP (guanosine diphosphate): see guanine. ) annually. In addition, if the PMI for August (52.9 percent) is annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. , it corresponds to a 3.4 percent increase in real GDP Real GDP This inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP". annually." THE LAST 12 MONTHS [TABLE OMITTED] New Orders ISM's New Orders Index registered 55.3 percent in August. The index is 2.2 percentage points lower than the 57.5 percent reported in July. A New Orders Index above 49.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars). Seven industries reported increases during August: Petroleum & Coal Products; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Wood Products; Chemical Products; and Fabricated Metal Products. [TABLE OMITTED] Production ISM's Production Index registered 56.1 percent in August, which is 0.5 percentage point higher than the 55.6 percent reported in July. August is the seventh consecutive month of production growth for manufacturers. An index above 49.8 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Of the industries reporting in August, seven registered growth: Nonmetallic Mineral Products; Wood Products; Furniture & Related Products; Chemical Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. [TABLE OMITTED] Employment ISM's Employment Index registered 51.3 percent in August, which is an increase of 1.1 percentage points when compared to July's reading of 50.2 percent. An Employment Index above 49.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics Bureau of Labor Statistics (BLS) A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables. (BLS See Bureau of Labor Statistics. ) data on manufacturing employment. The four industries reporting growth in employment during August are: Furniture & Related Products; Chemical Products; Machinery; and Food, Beverage & Tobacco Products. [TABLE OMITTED] Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was unchanged in August. ISM's Supplier Deliveries Index registered 50 percent in August, indicating no change from July. A reading above 50 percent indicates slower deliveries. The six industries reporting slower supplier deliveries in August are: Printing & Related Support Activities; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; and Chemical Products. [TABLE OMITTED] Inventories Manufacturers' inventories registered 45.4 percent in August, which is 3.1 percentage points lower than July's reading of 48.5 percent. This is the 13th consecutive month of inventory liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy . An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA BEA - Basic programming Environment for interactive-graphical Applications, from Siemens-Nixdorf. ) figures on overall manufacturing inventories (in chained 2000 dollars). The four industries reporting higher inventories in August are: Textile Mills; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Paper Products. [TABLE OMITTED] Customers' Inventories(b) The ISM Customers' Inventories Index registered 49 percent in August, which is 2 percentage points lower than the 51 percent reported in July. The index indicates that respondents believe their customers have less than sufficient inventories on hand (inventories are too low) at this time. Seven industries reported higher customers' inventories during August: Paper Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Fabricated Metal Products; and Chemical Products. [TABLE OMITTED] Prices(b) In August, the ISM Prices Index registered 63 percent, indicating manufacturers are paying higher prices on average when compared to July. While 33 percent of respondents reported paying higher prices and 7 percent reported paying lower prices, 60 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. In August, 13 industries reported paying higher prices: Food, Beverage & Tobacco Products; Plastics & Rubber Products; Textile Mills; Printing & Related Support Activities; Transportation Equipment; Wood Products; Furniture & Related Products; Fabricated Metal Products; Paper Products; Chemical Products; Machinery; Miscellaneous Manufacturing; and Primary Metals. [TABLE OMITTED] Backlog of Orders(b) ISM's Backlog of Orders Index registered 50.5 percent in August, 1.5 percentage points lower than the 52 percent reported in July. Of the 84 percent of respondents who reported their backlog of orders, 19 percent reported greater backlogs, 18 percent reported smaller backlogs, and 63 percent reported no change from July. The five industries reporting an increase in order backlogs in August are: Wood Products; Machinery; Chemical Products; Transportation Equipment; and Food, Beverage & Tobacco Products. [TABLE OMITTED] New Export Orders(b) ISM's New Export Orders Index registered 57 percent in August, an increase of 0.5 percentage point when compared to July's index of 56.5 percent. This is the 57th consecutive month of growth in export orders. The nine industries reporting growth in new export orders in August are: Wood Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Miscellaneous Manufacturing; and Machinery. [TABLE OMITTED] Imports(b) Imports of materials by manufacturers grew during August as the Imports Index registered 52.5 percent, 2 percentage points lower than the 54.5 percent reported in July. This is the 68th consecutive month of growth in import orders. The eight industries reporting growth in import activity for August are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Furniture & Related Products; Plastics & Rubber Products; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. [TABLE OMITTED] (b) The Backlog of Orders, Prices, Customers' Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments. Buying Policy Average commitment leadtime for Capital Expenditures decreased 5 days to 110 days. Average leadtime for Production Materials decreased 3 days to 48 days. Average leadtime for Maintenance, Repair and Operating (MRO MRO In currencies, this is the abbreviation for the Mauritanian Ouguiya. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) Supplies increased 2 days to 24 days. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] About this Report The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation The Manufacturing ISM Report On Business([R]) is based on data compiled from purchasing and supply Purchasing and Supply can have several different definitions. According to the Institute for Supply Management (ISM) [1], purchasing is defined as a major function of an organization that is responsible for acquisition of required materials, services, and equipment. executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified diversified (di·verˑ·s by NAICS NAICS North American Industry Classification System , based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion. The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring. , sporting goods Noun 1. sporting goods - sports equipment sold as a commodity commodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport , toys and office supplies Office supplies is the generic term that refers to all supplies regularly used in offices by businesses and other organizations, from private citizens to governments, who works with the collection, refinement, and output of information (colloquially referred to as "paper work"). ). Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index Diffusion Index 1. A measure of the percentage of stocks that have advanced in price or are showing a positive momentum over a defined period. It is used in the technical analysis of stocks. 2. . Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). The resulting single index number for those meeting the criteria for seasonal adjustments (PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories) is then seasonally adjusted Seasonally adjusted Mathematically adjusted by moderating a macroeconomic indicator (e.g., oil prices/imports) so that relative comparisons can be drawn from month to month all year. to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index Composite Index A grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time. Also known simply as a "composite". based on the seasonally adjusted diffusion indexes for five of the indicators with varying weights: New Orders - 30%; Production - 25%; Employment - 20%; Supplier Deliveries - 15%; and Inventories - 10%. Diffusion indexes have the properties of leading indicators Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 41.9 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 41.9 percent, it is generally declining. The distance from 50 percent or 41.9 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis In statistics, a mathematical method of modeling the relationships among three or more variables. It is used to predict the value of one variable given the values of the others. For example, a model might estimate sales based on age and gender. . Responses to Buying Policy reflect the percent reporting the current month's leadtime, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern. The Manufacturing ISM Report On Business([R]) is published monthly by the Institute for Supply Management[TM]. The Institute for Supply Management[TM], established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. This report has been issued by the association since 1931, except for a four-year interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. during World War II. The full text version of the Manufacturing ISM Report On Business([R] )is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET). The next Manufacturing ISM Report On Business([R]) featuring the September 2007 data will be released at 10:00 a.m. (ET) on Monday, October 1, 2007. |
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