December 2014 Manufacturing ISM Report On Business – PMI At 55.5%

January 2, 2015

Economic activity in the manufacturing sector expanded in December for the 19th consecutive month, and the overall economy grew for the 67th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The report was issued by Bradley J. Holcomb, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  “The December PMI registered 55.5 percent, a decrease of 3.2 percentage points from November’s reading of 58.7 percent.  The New Orders Index registered 57.3 percent, a decrease of 8.7 percentage points from the reading of 66 percent in November.  The Production Index registered 58.8 percent, 5.6 percentage points below the November reading of 64.4 percent.  The Employment Index registered 56.8 percent, an increase of 1.9 percentage points from the November reading of 51.5 percent.  The Prices Index registered 38.5 percent, down 6 percentage points from the November reading of 44.5 percent, indicating lower raw materials prices in December relative to November.  Comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown.”

Manufacturing expanded in December as the PMI registered 55.5 percent, a decrease of 3.2 percentage points when compared to November’s reading of 58.7 percent, indicating growth in manufacturing for the 19th consecutive month.  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 43.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the December PMI indicates growth for the 67th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 19th consecutive month.  Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (55.8 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for December (55.5 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually.”

Of the 18 manufacturing industries, 11 are reporting growth in December.

Source: Institute for Supply Management