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Press Release: PMI(R) at 59.7%; December -2-1-3-18 10:15 AM EST

The 13 industries reporting growth in production during the month of December -- listed in order -- are: Apparel, Leather & Allied Products; Machinery; Paper Products; Computer & Electronic Products; Petroleum & Coal Products; Primary Metals; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Electrical Equipment, Appliances & Components. The only industry reporting a decrease in production in December compared to November is Nonmetallic Mineral Products.

 
Production   %Better  %Same  %Worse  Net  Index 
Dec 2017     32       59     9       +23  65.8 
Nov 2017     33       59     8       +25  63.9 
Oct 2017     30       59     11      +19  61.0 
Sep 2017     31       59     10      +21  62.2 
 

Employment

ISM(R) 's Employment Index registered 57 percent in December, a decrease of 2.7 percentage points when compared to the November reading of 59.7 percent. This indicates growth in employment in December for the 15th consecutive month. "Employment expansion remains strong, but difficulties across the supply chain continue to constrain production output. ISM(R) 's recent Semiannual Economic Forecast-indicates that 65 percent had difficulty hiring new employees and 44 percent increased starting pay to attract new workers," says Fiore. 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, the 11 reporting employment growth in December -- listed in order -- are: Primary Metals; Machinery; Computer & Electronic Products; Paper Products; Transportation Equipment; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Chemical Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components. Two industries -- Apparel, Leather & Allied Products; and Fabricated Metal Products -- reported a decrease in employment in December.

 
Employment   %Higher  %Same  %Lower  Net  Index 
Dec 2017     20       71     9       +11  57.0 
Nov 2017     23       70     7       +16  59.7 
Oct 2017     25       68     7       +18  59.8 
Sep 2017     24       69     7       +17  60.3 
 

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in December, as the Supplier Deliveries Index registered 57.9 percent. This is 1.4 percentage points higher than the 56.5 percent reported for November. "This is the 20th straight month of slowing supplier deliveries and continued delivery performance difficulties affecting production expansion. Modest gains were made to inventories in spite of these ongoing supply chain issues," says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 12 industries reporting slower supplier deliveries in December -- listed in order -- are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Machinery; Fabricated Metal Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; Chemical Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Primary Metals; and Miscellaneous Manufacturing. Two industries -- Electrical Equipment, Appliances & Components; and Transportation Equipment -- reported faster deliveries in December compared to November.

 
Supplier Deliveries   %Slower  %Same  %Faster  Net  Index 
Dec 2017              20       74     6        +14  57.9 
Nov 2017              21       68     11       +10  56.5 
Oct 2017              26       69     5        +21  61.4 
Sep 2017              32       64     4        +28  64.4 
 

Inventories*

The Inventories Index registered 48.5 percent in December, which is an increase of 1.5 percentage points when compared to the 47 percent reported for November, indicating raw materials inventories contracted in December. "The inventory contraction reflects the continued difficulty of the supply chain to deliver materials and services meeting production schedules," says Fiore. An Inventories Index greater than 42.9 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 10 industries reporting higher inventories in December -- listed in order -- are: Printing & Related Support Activities; Nonmetallic Mineral Products; Furniture & Related Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; Petroleum & Coal Products; Machinery; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing. The seven industries reporting lower inventories in December -- listed in order -- are: Textile Mills; Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

 
Inventories   %Higher  %Same  %Lower  Net  Index 
Dec 2017      18       61     21      -3   48.5 
Nov 2017      16       62     22      -6   47.0 
Oct 2017      17       62     21      -4   48.0 
Sep 2017      22       61     17      +5   52.5 
 

Customers' Inventories*

ISM(R) 's Customers' Inventories Index registered 42 percent in December, which is 3.5 percentage points lower than the 45.5 percent reported for November, indicating that customers' inventory levels were still considered too low in December. "The index continues to remain at low levels and continues to contract, at a faster rate. Production output was not sufficient to maintain acceptable customer inventory levels, " says Fiore.

One manufacturing industry -- Furniture & Related Products -- reported customers' inventories as being too high during the month of December. The 13 industries reporting customers' inventories as too low during December -- listed in order -- are: Textile Mills; Primary Metals; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; Paper Products; Food, Beverage & Tobacco Products; Transportation Equipment; Machinery; Fabricated Metal Products; and Computer & Electronic Products.

 
Customers'     %           %Too   %About  %Too 
 Inventories    Reporting   High   Right   Low  Net  Index 
Dec 2017       54          7      70      23    -16  42.0 
Nov 2017       57          9      73      18    -9   45.5 
Oct 2017       54          9      69      22    -13  43.5 
Sep 2017       58          6      72      22    -16  42.0 
 

Prices*

The ISM(R) Prices Index registered 69 percent in December, an increase of 3.5 percentage points from the November level of 65.5 percent, indicating an increase in raw materials prices for the 22nd consecutive month. In December, 41 percent of respondents reported paying higher prices, 3 percent reported paying lower prices, and 56 percent of supply executives reported paying the same prices as in November. "The Business Survey Committee noted price increases continue on metals (steel, aluminum, copper and scrap) intermediate chemicals, corrugate and plastic resins. The Committee also reported some price relief on selected electronic components," says Fiore. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Seventeen industries reported paying increased prices for raw materials in December, in the following order: Apparel, Leather & Allied Products; Wood Products; Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Primary Metals; Transportation Equipment; Petroleum & Coal Products; Furniture & Related Products; and Paper Products. The only industry reporting price decreases in December compared to November is Textile Mills.

 
Prices     %Higher  %Same  %Lower  Net  Index 
Dec 2017   41       56     3       +38  69.0 
Nov 2017   37       57     6       +31  65.5 
Oct 2017   43       51     6       +37  68.5 
Sep 2017   45       53     2       +43  71.5 
 

Backlog of Orders*

ISM(R) 's Backlog of Orders Index registered 56 percent in December, an increase of 1 percentage point when compared to the 55 percent reported for November, indicating growth in order backlogs for the 11th consecutive month. "Backlog expansion continued during the period. Backlog provides strong support to continued manufacturing expansion," says Fiore. Of the 89 percent of respondents who reported their backlog of orders, 28 percent reported greater backlogs, 16 percent reported smaller backlogs, and 56 percent reported no change from November.

The 11 industries reporting growth in order backlogs in December -- listed in order -- are: Textile Mills; Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; Furniture & Related Products; Paper Products; Computer & Electronic Products; Fabricated Metal Products; Transportation Equipment; and Primary Metals. The five industries reporting a decrease in order backlogs during December are: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Chemical Products.

 
Backlog of   % 
 Orders       Reporting   %Greater  %Same  %Less  Net  Index 
Dec 2017     89          28         56     16     +12  56.0 
Nov 2017     92          25         60     15     +10  55.0 
Oct 2017     88          26         58     16     +10  55.0 
Sep 2017     89          29         58     13     +16  58.0 
 

New Export Orders*

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January 03, 2018 10:15 ET (15:15 GMT)

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