PMI® at 58.8%; August Manufacturing ISM® Report On Business®; New Orders, Production, Backlog of Orders and Employment Continue Growing; Supplier Deliveries Slowing; Raw Materials Inventories Growing, Customer Inventories Too Low; Prices Increasing at Sam

TEMPE, Ariz., Sept. 1, 2017 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 99th consecutive month, say the nation's supply executives in the latest Manufacturing ISM^® Report On Business^®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee: "The August PMI^® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent. The New Orders Index registered 60.3 percent, a decrease of 0.1 percentage point from the July reading of 60.4 percent. The Production Index registered 61 percent, a 0.4 percentage point increase compared to the July reading of 60.6 percent. The Employment Index registered 59.9 percent, an increase of 4.7 percentage points from the July reading of 55.2 percent. The Supplier Deliveries Index registered 57.1 percent, a 1.7 percentage point increase from the July reading of 55.4 percent. The Inventories Index registered 55.5 percent, an increase of 5.5 percentage points from the July reading of 50 percent. The Prices Index registered 62 percent in August, the same reading as July, indicating higher raw materials' prices for the 18th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in August, as well as supplier deliveries slowing (improving) and inventories increasing during the period. The Customers' Inventories Index experienced a sharp decline in August compared to July."

Of the 18 manufacturing industries, 14 reported growth in August, in the following order: Textile Mills; Petroleum & Coal Products; Machinery; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Paper Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Chemical Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; and Food, Beverage & Tobacco Products. Three industries reported contraction in August compared to July: Apparel, Leather & Allied Products; Primary Metals; and Furniture & Related Products.

WHAT RESPONDENTS ARE SAYING …

• "Steady demand across businesses." (Chemical Products)
• "Demand for light construction equipment continues strong; usually at this time of year, demand slackens." (Machinery)
• "Overall very steady; starting to pick up as expected." (Computer & Electronic Products)
• "Overall optimism about the market, both for 2017 and 2018." (Miscellaneous Manufacturing)
• "Business has strengthened over the summer, beyond [the] same period last year." (Paper Products)
• "Busy production month for August." (Textile Mills)
• "Sales remain strong month-to-month." (Transportation Equipment)
• "Slightly higher order intake." (Electrical Equipment, Appliances & Components)
• "Order board is very strong right now." (Food, Beverage & Tobacco Products)
• "Business is steady and strong." (Furniture & Related Products)

Manufacturing ISM^® Report On Business^® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum (10); Caustic Soda (2); Copper; Corrugate (11); Corrugated Boxes (6); Electric Components (3); Food Ingredients; Lumber (2); Mechanical Components; Memory — Computer (2); Resins; Scrap — All Types; Solvents; Steel; Steel — Hot Rolled (9); and Titanium Dioxide (2).

Commodities Down in Price
Benzene Products.

Commodities in Short Supply
Capacitors (2); Electric Components (3); Electronic Components (6); Integrated Circuits (2); Memory — Computer (2); and Methacrylates.

Note: The number of consecutive months the commodity is listed is indicated after each item.

AUGUST 2017 MANUFACTURING INDEX SUMMARIES

PMI^®
Manufacturing expanded in August as the PMI^® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent. This indicates growth in manufacturing for the 12th consecutive month and is the highest reading since April 2011, when the index registered 59.1 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^® above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August PMI^® indicates growth for the 99th consecutive month in the overall economy and the 12th straight month of growth in the manufacturing sector. Fiore says, "The past relationship between the PMI^® and the overall economy indicates that the average PMI^® for January through August (56.7 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^® for August (58.8 percent) is annualized, it corresponds to a 4.9 percent increase in real GDP annually."

THE LAST 12 MONTHS

New Orders
ISM^®'s New Orders Index registered 60.3 percent in August, which is a decrease of 0.1 percentage point when compared to the 60.4 percent reported for July, indicating growth in new orders for the 12th consecutive month. "Order input continues at a strong pace consistent with the last four months of order activity," says Fiore. A New Orders Index above 52.3 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Twelve of 18 industries reported growth in new orders in August, listed in the following order: Textile Mills; Petroleum & Coal Products; Paper Products; Transportation Equipment; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Computer & Electronic Products; Machinery; Chemical Products; Fabricated Metal Products; and Plastics & Rubber Products. Four industries —  Apparel, Leather & Allied Products; Furniture & Related Products; Primary Metals; and Food, Beverage & Tobacco Products — reported a decrease in new orders in August compared to July.

Production
ISM^®'s Production Index registered 61 percent in August, which is an increase of 0.4 percentage point when compared to the 60.6 percent reported for July, indicating growth in production for the 12th consecutive month. "Production remains at strong growth levels in most industries in spite of supplier delivery constraints," says Fiore. An index above 51.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 11 industries reporting growth in production during the month of August — listed in order — are: Textile Mills; Petroleum & Coal Products; Transportation Equipment; Computer & Electronic Products; Printing & Related Support Activities; Fabricated Metal Products; Machinery; Miscellaneous Manufacturing; Paper Products; Chemical Products; and Food, Beverage & Tobacco Products. Four industries — Apparel, Leather & Allied Products; Primary Metals; Plastics & Rubber Products, and Electrical Equipment, Appliances & Components — reported a decrease in production in August compared to July.

Employment
ISM^®'s Employment Index registered 59.9 percent in August, an increase of 4.7 percentage points when compared to the July reading of 55.2 percent. This indicates growth in employment in August for the 11th consecutive month. Employment levels have been expanding since October 2016 and reached the highest level of expansion since June 2011, when the index registered 61.3 percent. 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 13 reporting employment growth in August — listed in order — are: Textile Mills; Machinery; Food, Beverage & Tobacco Products; Paper Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Transportation Equipment; Plastics & Rubber Products; Chemical Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Fabricated Metal Products; and Computer & Electronic Products. The two industries reporting a decrease in employment in August are: Apparel, Leather & Allied Products; and Primary Metals.

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in August, as the Supplier Deliveries Index registered 57.1 percent. This is 1.7 percentage points higher than the 55.4 percent reported for July. This is the 16th straight month of slowing supplier deliveries, and the index achieved its highest level since December 2014, when it registered 58.3 percent. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 11 industries reporting slower supplier deliveries in August — listed in order — are: Fabricated Metal Products; Plastics & Rubber Products; Machinery; Paper Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Primary Metals; Chemical Products; and Transportation Equipment. The one industry, Miscellaneous Manufacturing, reported faster deliveries in August compared to July. Six industries reported no change in supplier deliveries in August compared to July.

Inventories*
The Inventories Index registered 55.5 percent in August, which is an increase of 5.5 percentage points when compared to the 50 percent reported for July, indicating raw materials inventories grew in August compared to July. The index reached its highest level since September 2010, when it registered 56 percent. 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 11 industries reporting higher inventories in August — listed in order — are: Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Petroleum & Coal Products; Nonmetallic Mineral Products; Furniture & Related Products; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Plastics & Rubber Products; Chemical Products; and Machinery. The five industries reporting lower inventories in August are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Primary Metals; Paper Products; and Food, Beverage & Tobacco Products.

Customers' Inventories*
ISM^®'s Customers' Inventories Index registered 41 percent in August, which is 8 percentage points lower than the 49 percent reported for July, indicating that customers' inventory levels are considered too low in August. The index is at its lowest level since May 2011, when it registered 39.5 percent.

The only manufacturing industry reporting customers' inventories as being too high during the month of August is Furniture & Related Products. The nine industries reporting customers' inventories as too low during August — listed in order — are: Plastics & Rubber Products; Machinery; Paper Products; Transportation Equipment; Computer & Electronic Products; Miscellaneous Manufacturing; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. Seven industries reported no change in customer inventories in August compared to July.

Prices*
The ISM^® Prices Index registered 62 percent in August, the same rate of growth as July, indicating an increase in raw materials prices for the 18th consecutive month. In August, 30 percent of respondents reported paying higher prices, 6 percent reported paying lower prices, and 64 percent of supply executives reported paying the same prices as in July. Fiore comments, "The Business Survey Committee noted price increases in many areas, including metals (steel and aluminum); food ingredients; electronic components; lumber and wood products; basic chemicals; and plastics." 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.

Of the 18 manufacturing industries, the 16 that reported paying increased prices for raw materials in August — listed in order — are: Textile Mills; Fabricated Metal Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Furniture & Related Products; Primary Metals; Machinery; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Computer & Electronic Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Chemical Products; Electrical Equipment, Appliances & Components; and Transportation Equipment. No industries reported paying lower prices in August compared to July.

Backlog of Orders*
ISM^®'s Backlog of Orders Index registered 57.5 percent in August, an increase of 2.5 percentage points from the 55 percent reported for July, indicating growth in order backlogs for the seventh consecutive month. Of the 90 percent of respondents who reported their backlog of orders, 28 percent reported greater backlogs, 13 percent reported smaller backlogs, and 59 percent reported no change from July.

The 12 industries reporting growth in order backlogs in August — listed in order — are: Textile Mills; Paper Products; Machinery; Fabricated Metal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Primary Metals; Computer & Electronic Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Chemical Products. The three industries reporting a decrease in order backlogs during August are: Wood Products; Apparel, Leather & Allied Products; and Furniture & Related Products.

New Export Orders*
ISM^®'s New Export Orders Index registered 55.5 percent in August, a decrease of 2 percentage points when compared to the 57.5 percent reported for July, indicating growth in new export orders for the 18th consecutive month but at a slower rate compared to July.

The eight industries reporting growth in new export orders in August — listed in order — are: Petroleum & Coal Products; Machinery; Paper Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Plastics & Rubber Products; and Miscellaneous Manufacturing. Two industries, Apparel, Leather & Allied Products; and Primary Metals, reported a decrease in new export orders. Eight industries reported no change in exports in August compared to July.

Imports*
ISM^®'s Imports Index registered 54.5 percent in August, a decrease of 1.5 percentage points when compared to the 56 percent reported for July, indicating that imports are growing in August for the seventh consecutive month but at a slower rate compared to July.

The eight industries reporting growth in imports during the month of August — listed in order — are: Textile Mills; Computer & Electronic Products; Transportation Equipment; Machinery; Plastics & Rubber Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Food, Beverage & Tobacco Products. Four industries — Apparel, Leather & Allied Products; Primary Metals; Paper Products; and Electrical Equipment, Appliances & Components — reported a decrease in imports during August compared to July.