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February 2013 Manufacturing ISM Report On Business®

FOR RELEASE: March 1, 2013


Contact: Rose Marie Goupil
ISM, ROB Media Relations
Tempe, Arizona
800/888-6276, Ext. 3015
E-mail: rgoupil@ism.ws


PMI™ at 54.2%


DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, 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 February 2013.


New Orders, Production and Employment Growing
Inventories Growing
Supplier Deliveries Slowing

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in February for the third consecutive month, and the overall economy grew for the 45th 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 54.2 percent, an increase of 1.1 percentage points from January's reading of 53.1 percent, indicating expansion in manufacturing for the third consecutive month. This month's reading reflects the highest PMI™ since June 2011, when the index registered 55.8 percent. The New Orders Index registered 57.8 percent, an increase of 4.5 percent over January's reading of 53.3 percent, indicating growth in new orders for the second consecutive month. As was the case in January, all five of the PMI™'s component indexes — new orders, production, employment, supplier deliveries and inventories — registered in positive territory in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in February relative to January."

Of the 18 manufacturing industries, 15 are reporting growth in February in the following order: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Fabricated Metal Products; Furniture & Related Products; Petroleum & Coal Products; Wood Products; Printing & Related Support Activities; Transportation Equipment; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Machinery; and Primary Metals. The three industries reporting contraction in February are: Textile Mills; Computer & Electronic Products; and Chemical Products.

WHAT RESPONDENTS ARE SAYING …
  • "Automotive is still going strong, which allows budgeting for capital equipment." (Machinery)
  • "Overall business is good." (Food, Beverage & Tobacco Products)
  • "Starting to pick up after a slower than normal year-end." (Miscellaneous Manufacturing)
  • "Continuing slowdown in defense spending." (Computer & Electronic Products)
  • "More RFQs coming in than the past three months." (Nonmetallic Mineral Products)
  • "Workload is growing; need qualified machinists." (Fabricated Metal Products)
  • "Europe is still a concern in the auto sector." (Transportation Equipment)
  • "Business seems to be on an uptick. The normal seasonal downturn for us has been much shorter and not as severe as in the past four years." (Furniture & Related Products)
  • "Demand indicators are robust. Supply is constrained. Pricing is escalating." (Wood Products)
  • "Customer demand has softened. At first, that decline was consistent with seasonal patterns but has persisted beyond historical periods." (Chemical Products)
MANUFACTURING AT A GLANCE
FEBRUARY 2013


Index
Series
Index
Feb
Series
Index
Jan
Percentage
Point
Change


Direction
Rate
of
Change

Trend*
(Months)
PMI™ 54.2 53.1 +1.1 Growing Faster 3
New Orders 57.8 53.3 +4.5 Growing Faster 2
Production 57.6 53.6 +4.0 Growing Faster 6
Employment 52.6 54.0 -1.4 Growing Slower 41
Supplier Deliveries 51.4 53.6 -2.2 Slowing Slower 4
Inventories 51.5 51.0 +0.5 Growing Faster 2
Customers' Inventories 46.5 48.5 -2.0 Too Low Faster 15
Prices 61.5 56.5 +5.0 Increasing Faster 7
Backlog of Orders 55.0 47.5 +7.5 Growing From Contracting 1
Exports 53.5 50.5 +3.0 Growing Faster 3
Imports 54.0 50.0 +4.0 Growing From Unchanged 1
             
OVERALL ECONOMY Growing Faster 45
Manufacturing Sector Growing Faster 3

*Number of months moving in current direction.


COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum; Aluminum Products (5); Caustic Soda (7); Copper Based Products (2); Corrugated Boxes (7); Diesel Fuel; Gasoline; HDPE (2); Lumber (2); Natural Gas; Oil (2); Packaging Materials; Plastic Components; Plastic Resins; Polypropylene (4); Steel; Steel Alloy; and Steel Bars.

Commodities Down in Price

Corn; Steel — Hot Rolled; and Wheat (2).

Commodities in Short Supply

Steel Bars is the only commodity reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.



FEBRUARY 2013 MANUFACTURING INDEX SUMMARIES


PMI™

Manufacturing expanded in February as the PMI™ registered 54.2 percent, an increase of 1.1 percentage points when compared to January's reading of 53.1 percent. This month's reading reflects the highest PMI™ since June 2011, when the index registered 55.8 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 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI™ indicates growth for the 45th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the third consecutive month. Holcomb stated, "The past relationship between the PMI™ and the overall economy indicates that the average PMI™ for January and February (53.7 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI™ for February (54.2 percent) is annualized, it corresponds to a 3.7 percent increase in real GDP annually."

THE LAST 12 MONTHS
Month PMI™   Month PMI™
Feb 2013   54.2   Aug 2012   50.7
Jan 2013   53.1   Jul 2012   50.5
Dec 2012   50.2   Jun 2012   50.2
Nov 2012   49.9   May 2012   52.5
Oct 2012   51.7   Apr 2012   54.1
Sep 2012   51.6   Mar 2012   53.3
Average for 12 months – 51.8
High – 54.2
Low – 49.9

New Orders

ISM's New Orders Index registered 57.8 percent in February, an increase of 4.5 percentage points when compared to the January reading of 53.3 percent. This represents growth in new orders for the second consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 15 industries reporting growth in new orders in February — listed in order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing; Paper Products; Machinery; Nonmetallic Mineral Products; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Primary Metals; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; and Petroleum & Coal Products. The only industry reporting a decrease in new orders during February is Wood Products.

New
Orders
%
Better
%
Same
%
Worse

Net

Index
Feb 2013 37 47 16 +21 57.8
Jan 2013 28 51 21 +7 53.3
Dec 2012 24 45 31 -7 49.7
Nov 2012 26 43 31 -5 51.1

Production

ISM's Production Index registered 57.6 percent in February, which is an increase of 4 percentage points when compared to the 53.6 percent reported in January. This indicates growth in production for the sixth consecutive month. An index above 51.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 13 industries reporting growth in production during the month of February — listed in order — are: Wood Products; Paper Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Primary Metals; Apparel, Leather & Allied Products; Printing & Related Support Activities; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Machinery. The four industries reporting a decrease in production in February are: Textile Mills; Petroleum & Coal Products; Chemical Products; and Furniture & Related Products.


Production
%
Better
%
Same
%
Worse

Net

Index
Feb 2013 36 49 15 +21 57.6
Jan 2013 25 56 19 +6 53.6
Dec 2012 21 54 25 -4 52.6
Nov 2012 23 53 24 -1 53.1

Employment

ISM's Employment Index registered 52.6 percent in February, which is 1.4 percentage points lower than the 54 percent reported in January. This month's reading indicates growth in employment for the 41st consecutive month. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, 10 reported growth in employment in February in the following order: Petroleum & Coal Products; Apparel, Leather & Allied Products; Paper Products; Printing & Related Support Activities; Furniture & Related Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; Fabricated Metal Products; and Primary Metals. The five industries reporting a decrease in employment in February are: Chemical Products; Transportation Equipment; Computer & Electronic Products; Machinery; and Wood Products.


Employment
%
Higher
%
Same
%
Lower

Net

Index
Feb 2013 21 65 14 +7 52.6
Jan 2013 17 71 12 +5 54.0
Dec 2012 19 62 19 0 51.9
Nov 2012 15 63 22 -7 50.1

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in February as the Supplier Deliveries Index registered 51.4 percent, which is 2.2 percentage points lower than the 53.6 percent reported in January. This indicates the fourth consecutive month of slower supplier deliveries. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The five industries reporting slower supplier deliveries in February are: Plastics & Rubber Products; Petroleum & Coal Products; Primary Metals; Fabricated Metal Products; and Electrical Equipment, Appliances & Components. The four industries reporting faster supplier deliveries in February are: Machinery; Computer & Electronic Products; Chemical Products; and Miscellaneous Manufacturing. Nine industries reported no change in supplier deliveries in February compared to January.

Supplier
Deliveries
%
Slower
%
Same
%
Faster

Net

Index
Feb 2013 9 84 7 +2 51.4
Jan 2013 10 85 5 +5 53.6
Dec 2012 9 83 8 +1 53.7
Nov 2012 7 81 12 -5 50.1

Inventories*

The Inventories Index registered 51.5 percent in February, which is 0.5 percentage point higher than the 51 percent reported in January. This month's reading indicates that respondents are reporting inventories are growing in February for the second consecutive month. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The nine industries reporting higher inventories in February — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Plastics & Rubber Products; Petroleum & Coal Products; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The six industries reporting decreases in inventories in February — listed in order — are: Textile Mills; Primary Metals; Furniture & Related Products; Paper Products; Computer & Electronic Products; and Nonmetallic Mineral Products.


Inventories
%
Higher
%
Same
%
Lower

Net

Index
Feb 2013 22 59 19 +3 51.5
Jan 2013 20 62 18 +2 51.0
Dec 2012 14 58 28 -14 43.0
Nov 2012 18 54 28 -10 45.0

Customers' Inventories*

The ISM Customers' Inventories Index registered 46.5 percent in February, which is 2 percentage points lower than in January when the index registered 48.5 percent. This month's reading indicates that customers' inventories are considered too low, and lower than reported in January. Customers' inventories have registered at or below 50 percent for 47 consecutive months. A reading below 50 percent indicates customers' inventories are considered too low.

The three manufacturing industries reporting customers' inventories as being too high during the month of February are: Primary Metals; Chemical Products; and Food, Beverage & Tobacco Products. The 11 industries reporting customers' inventories as too low during February — listed in order — are: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Paper Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Transportation Equipment; Machinery; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; and Apparel, Leather & Allied Products.

Customers'
Inventories
%
Reporting
%Too
High
%About
Right
%Too
Low

Net

Index
Feb 2013 69 11 71 18 -7 46.5
Jan 2013 71 14 69 17 -3 48.5
Dec 2012 64 19 56 25 -6 47.0
Nov 2012 66 14 57 29 -15 42.5

Prices*

The ISM Prices Index registered 61.5 percent in February, which is an increase of 5 percentage points compared to the January reading of 56.5 percent. In February, 31 percent of respondents reported paying higher prices, 8 percent reported paying lower prices, and 61 percent of supply executives reported paying the same prices as in January. A Prices Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

Of the 18 manufacturing industries, 14 reported paying increased prices during the month of February in the following order: Textile Mills; Wood Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Transportation Equipment; and Computer & Electronic Products. The only industry reporting paying lower prices during February is Apparel, Leather & Allied Products.


Prices
%
Higher
%
Same
%
Lower

Net

Index
Feb 2013 31 61 8 +23 61.5
Jan 2013 23 67 10 +13 56.5
Dec 2012 18 75 7 +11 55.5
Nov 2012 18 69 13 +5 52.5

Backlog of Orders*

ISM's Backlog of Orders Index registered 55 percent in February, which is 7.5 percentage points higher than the 47.5 percent reported in January. This is the first month of growth in order backlogs since March 2012, when the index registered 52.5 percent. Of the 83 percent of respondents who reported their backlog of orders, 26 percent reported greater backlogs, 16 percent reported smaller backlogs, and 58 percent reported no change from January.

The 14 industries reporting increased order backlogs in February — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Primary Metals; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Petroleum & Coal Products; Plastics & Rubber Products; Fabricated Metal Products; Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; and Machinery. The two industries reporting decreases in order backlogs during February are: Computer & Electronic Products; and Wood Products.

Backlog of
Orders
%
Reporting
%
Greater
%
Same
%
Less

Net

Index
Feb 2013 83 26 58 16 +10 55.0
Jan 2013 85 20 55 25 -5 47.5
Dec 2012 86 22 53 25 -3 48.5
Nov 2012 86 14 54 32 -18 41.0

New Export Orders*

ISM's New Export Orders Index registered 53.5 percent in February, which is 3 percentage points higher than the 50.5 percent reported in January. This month's reading represents only the third month of growth in the index since May 2012, when the index registered 53.5 percent.

The seven industries reporting growth in new export orders in February — listed in order — are: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Machinery. The three industries reporting a decrease in new export orders during February are: Wood Products; Primary Metals; and Chemical Products. Eight industries reported no change in new export orders for the month of February when compared to January.

New Export
Orders
%
Reporting
%
Higher
%
Same
%
Lower

Net

Index
Feb 2013 73 16 75 9 +7 53.5
Jan 2013 72 12 77 11 +1 50.5
Dec 2012 74 16 71 13 +3 51.5
Nov 2012 77 11 72 17 -6 47.0

Imports*

ISM's Imports Index registered 54 percent in February, which is 4 percentage points higher than the 50 percent reported in January. This month's reading indicates that import levels are growing for the second time in the past three months.

The nine industries reporting growth in imports during the month of February — listed in order — are: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Machinery. The three industries reporting a decrease in imports during February are: Plastics & Rubber Products; Primary Metals; and Chemical Products.


Imports
%
Reporting
%
Higher
%
Same
%
Lower

Net

Index
Feb 2013 75 20 68 12 +8 54.0
Jan 2013 75 13 74 13 0 50.0
Dec 2012 77 16 71 13 +3 51.5
Nov 2012 79 10 76 14 -4 48.0

* The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.


Buying Policy

Average commitment lead time for Capital Expenditures decreased 8 days to 112 days. Average lead time for Production Materials decreased 3 days to 56 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 3 days to 25 days.

Percent Reporting

Capital
Expenditures
Hand-
to-
Mouth

30
Days

60
Days

90
Days

6
Months

1
Year+

Average
Days
Feb 2013 28 10 9 18 22 13 112
Jan 2013 27 7 12 14 26 14 120
Dec 2012 25 9 13 16 24 13 116
Nov 2012 25 6 14 17 26 12 117
 

Production
Materials
Hand-
to-
Mouth

30
Days

60
Days

90
Days

6
Months

1
Year+

Average
Days
Feb 2013 17 35 27 14 5 2 56
Jan 2013 16 35 26 16 4 3 59
Dec 2012 16 40 22 17 3 2 54
Nov 2012 16 36 26 17 3 2 55
 

MRO
Supplies
Hand-
to-
Mouth

30
Days

60
Days

90
Days

6
Months

1
Year+

Average
Days
Feb 2013 47 38 10 4 1 0 25
Jan 2013 44 39 12 4 0 1 28
Dec 2012 46 39 10 4 1 0 25
Nov 2012 46 40 10 3 1 0 25

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® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, 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, sporting goods, toys and office supplies).

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. 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 and Supplier Deliveries) is then seasonally adjusted 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 based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators 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 42.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.2 percent, it is generally declining. The distance from 50 percent or 42.2 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.

The Manufacturing ISM Report On Business® surveys are sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM then compiles the reports for release on the first business day of the following month.

The industries reporting growth, as indicated in the Manufacturing ISM Report On Business® monthly reports, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month's lead time, 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® is published monthly by the Institute for Supply Management™, the first supply institute in the world. Founded in 1915, ISM exists to lead and serve the supply management profession and is a highly influential and respected association in the global marketplace. ISM's mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM Report On Business® is posted on ISM's website 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® featuring the March 2013 data will be released at 10:00 a.m. (ET) on Monday, April 1, 2013.



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