ISM Reports A Fourteen Year High In New Orders
CAMS Weekly View from the Corner – Week ending 1/5/2018
January 8, 2018
The Institute of Supply Management (ISM) is the largest private not-for-profit entity that advances the practice of supply management on a global basis. Having been around for decades their membership is large and broad in regards to the numerous industries their membership represents.
The ISM has been surveying said membership regularly for decades and simultaneously has published their ISM Manufacturing Report on Business. Their monthly report has become an established economic indicator. A key measure within this report is the Purchasing Managers Index which is made up of various measures of activity.
A number above 50 for the PMI represents growth and below 50 represents contraction. Moving further away from 50 in either direction represents enhanced strength or weakness.
This past week the PMI for Manufacturing in December came in at nearly 60 representing growth at an accelerating rate. In addition, New Orders, which is a component of the overall Index, posted continued notable strength that also is accelerating.
“New Orders expansion continues at a strong pace, with the index at seven straight months of levels above 60 percent. This is its highest expansion level in 14 years,” says Fiore.
The above table reflects the results of both the overall PMI Index as well as the New Orders activity. The 59.7 reading for the overall PMI reflects the strongest level attained in recent years outside of the September 2017 reading of 60.8.
In the case of New Orders activity, as Mr. Fiore (Chair of ISM’s Survey Committee) states in our header quote directly above, we are seeing the highest level in 14 years. All told, via the most recent membership survey from the Institute for Supply Management’s Report on Business, economic activity continues on a growth tract at an accelerating rate.
If you are a consistent reader of these Weekly Views you may recognize our on-going theme that we need to see solid economic growth moving forward to fundamentally support our highly valued markets. The type of growth displayed in the above PMI results are pointing to what we need to see on a continued basis.
I wish you well…
P.S. As an additional excerpt from the ISM report is a list of industries which reported on-going growth in New Orders. If interested notice the broad swath of industries reporting increased strength.
Fifteen of 18 industries reported growth in new orders in December, listed in the following order: Machinery; Apparel, Leather & Allied Products; Primary Metals; Computer & Electronic Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Petroleum & Coal Products. The only industry reporting a decrease in new orders in December compared to November is Wood Products.
Director, Market Research & Portfolio Analysis
Portfolio Manager, CAMS Spectrum Portfolio
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