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Manufacturing levels pick up slightly in Nov.

Even though the Institute of Supply Management's purchasing managers' index gained ground in November, the manufacturing sector "continues to need drivers that will help end [its] stagnation," in the words of Norbert Ore, chair of the institute's manufacturing business survey committee.

The November PMI rose 70 basis points over its October level, reaching 49.2 percent. The gain broke a two-month streak of declines in the key manufacturing sector number. But it was still less than the 50 percent level that serves as the boundary between growth and contraction for this sector of the economy.

Certainly, comments from the purchasing and supply executives who participated in the monthly survey indicated that the index's rise was no cause for celebration. These executives said their business was either "flat," "depressed" or "in the doldrums" in November.

Plus, several of the component indices that go into the main number lost ground last month. The new export orders index fell by 530 basis points from its October reading, to 49.1 percent. The prices index dropped 260 basis points to 55.7 percent. The suppliers' delivery index decreased by 180 basis points to 50.8 percent. The employment index was 43.8 percent, 120 basis points less than its October level. The new orders index shed 100 basis points, finishing November at 49.9 percent.

Put into perspective, however, Ore noted that "November's decline in manufacturing was slight when compared to October. The trend is well established that the overall economy is holding up, but the manufacturing sector is feeling the brunt of the downturn."

Referring to the component figures, Ore added, "The decline in manufacturing employment is quickening. We are seeing a slowing in the rate of price increases. Overall, there are not really any signs of potential change either upward or downward."

Some manufacturing industry analysts studying the November numbers noted some reason for optimism. Michael Niemira, economist for the Bank of Tokyo-Mitsubishi, observed that the PMI had increased for seven straight months before falling off in September and October — a sign that the manufacturing sector may be on the road to recovery.

"Keep in mind," Niemira said, "that a dip is not unusual in expansions. Indeed, in the 1991 recovery, the PMI increased for five months between June and October before succumbing to a three-month dip."

Other analysts were somewhat less optimistic. Anthony Karydakis, analyst for Banc One Capital Markets, called the rise in the November index "quite disappointing, as it leaves the series below the key level of 50 for the third consecutive month."

Meanwhile, the institute noted that textiles was one of the eight industries (out of a total of 20) that reported growth in November.

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