Board Converting News, January 15, 2023

ISM: US Manufacturing PMI Contracts At 47.4 Percent

Board Converting NEWS INTERNET DIRECTORY

Economic activity in the manufacturing sector contracted in December for the 14th consecutive month following a 28-month period of growth, say the nation’s supply execu- tives in the latest Manufacturing ISM Report On Business. The report was issued last week by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Manage- ment (ISM) Manufacturing Business Survey Committee: “The Manufacturing PMI registered 47.4 percent in De- cember, up 0.7 percentage point from the 46.7 percent recorded in November. The overall economy continued in contraction for a third month after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that. The New Or- ders Index remained in contraction territory at 47.1 percent, 1.2 percentage points lower than the figure of 48.3 percent recorded in November. The Production Index reading of 50.3 percent is a 1.8-percentage point increase compared to November's figure of 48.5 percent. The Prices Index registered 45.2 percent, down 4.7 percentage points com- pared to the reading of 49.9 percent in November. The Backlog of Orders Index registered 45.3 percent, 6 per- centage points higher than the November reading of 39.3 percent. The Employment Index registered 48.1 percent, up 2.3 percentage points from the 45.8 percent reported in November. “The Supplier Deliveries Index figure of 47 percent is 0.8 percentage point higher than the 46.2 percent record- ed in November. (Supplier Deliveries is the only ISM Report On Business index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) “The Inventories Index decreased by 0.5 percentage point to 44.3 percent; the November reading was 44.8 percent. The New Export Orders Index reading of 49.9 percent is 3.9 percentage points higher than November’s figure of 46 percent. The Imports Index remained in con- traction territory, registering 46.4 percent, 0.2 percentage point higher than the 46.2 percent reported in November.” Fiore continues, “The U.S. manufacturing sector con- tinued to contract, but at a slightly slower rate in Decem- ber as compared to November. Companies are still man- aging outputs appropriately as order softness continues. Demand eased, with the (1) New Orders Index contracting at a faster rate, (2) New Export Orders Index essentially flat, and (3) Backlog of Orders Index climbing back above 40 percent but still in fairly strong contraction territory. The Customers’ Inventories Index returned to contrac- tion, becoming more accommodative for future produc- tion. Output/Consumption (measured by the Production and Employment indexes) contracted but improved, with a combined 4.1-percentage point upward impact on the Manufacturing PMI calculation. Panelists’ companies main- CONTINUED ON PAGE 42

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January 15, 2024

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