U.S. August ISM Manufacturing Report on Business (Text)
QBy Editor: Alex Tanzi – Sep 1, 2011 10:19 AM ET
Following is the text of the U.S. manufacturing conditions from the Institute for Supply Management.
August Manufacturing ISM Report On Business;
PMI at 50.6%; Employment and Inventories Growing;
AUGUST 2011 MANUFACTURING INDEX SUMMARIES
Manufacturing continued its growth in August as the PMI registered 50.6 percent, a decrease of 0.3 percentage point when compared to July’s reading of 50.9 percent. The PMI registered the lowest reading since July 2009, when it registered 49 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 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 27th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 25th consecutive month. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (56.8 percent) corresponds to a 5 percent increase in real gross domestic product (GDP). In addition, if the PMI for August (50.6 percent) is annualized, it corresponds to a 2.8 percent increase in real GDP annually.”
ISM’s New Orders Index registered 49.6 percent in August, which is an increase of 0.4 percentage point when compared to the 49.2 percent reported in July. This is the second consecutive month of contraction in the New Orders Index, following 24 months of growth. The last time the index contracted was in June of 2009, when the New Orders Index registered 48.9 percent. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
The seven industries reporting growth in new orders in August — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Paper Products; Fabricated Metal Products; and Transportation Equipment. The seven industries reporting decreases in new orders in August — listed in order — are: Electrical Equipment, Appliances & Components; Textile Mills; Nonmetallic Mineral Products; Machinery; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products.