ISM: New Orders And Backlogs Contracting, Production Growing Economic activity in the manufacturing sector contracted in November for the first time since May 2020 after 29 consecutive months of growth, say the nation’s supply ex- ecutives in the Manufacturing ISM Report On Business. The report was issued by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee: “The November Manufacturing PMI registered 49 per- cent, 1.2 percentage points lower than the 50.2 percent recorded in October. Regarding the overall economy, this figure indicates expansion for the 30th month in a row af- ter contraction in April and May 2020. “The Manufacturing PMI figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders
Index remained in contraction territory at 47.2 percent, two percentage points lower than the 49.2 percent recorded in October. The Production Index reading of 51.5 percent is a 0.8-percentage point decrease compared to Octo- ber’s figure of 52.3 percent. The Prices Index registered 43 percent, down 3.6 percentage points compared to the October figure of 46.6 percent; this is the index’s lowest reading since May 2020 (40.8 percent). The Backlog of Orders Index registered 40 percent, 5.3 percentage points lower than the October reading of 45.3 percent. The Em- ployment Index returned to contraction territory (48.4 per- cent, down 1.6 percentage points) after being unchanged in October at 50 percent. “The Supplier Deliveries Index reading of 47.2 percent is 0.4 percentage point higher than the October figure of 46.8 percent. Except for last month, the Supplier Deliver- ies Index hasn’t been at this level since February 2012 (47 percent). The Inventories Index registered 50.9 percent, 1.6 percentage points lower than the Octo- ber reading of 52.5 percent.
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“The New Export Orders Index reading of 48.4 percent is up 1.9 percentage points compared to October’s figure of 46.5 per- cent. The Imports Index dropped into con- traction territory at 46.6 percent, 4.2 per- centage points below the October reading of 50.8 percent.” “The U.S. manufacturing sector dipped into contraction, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began. With Business Survey Committee panelists reporting soft- ening new order rates over the previous six months, the November composite index reading reflects companies’ preparing for future lower output. Demand eased, with the (1) New Orders Index remaining in con- traction territory, (2) New Export Orders In- dex below 50 percent for a fourth consecu- tive month, (3) Customers’ Inventories Index effectively in ‘just right’ territory, climbing 7.1 percentage points, and (4) Backlog of Or- ders Index moving deeper into contraction. Output/Consumption (measured by the Pro- duction and Employment indexes) declined month over month, with a combined neg- ative 2.4-percentage point impact on the Manufacturing PMI calculation. “The Employment Index moved back into contraction, and the Production Index decreased but still remained in modest growth territory. Panelists’ companies con- firm that they are continuing to manage head counts through a combination of hir- ing freezes, employee attrition, and now layoffs. Inputs — defined as supplier deliv-
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