February Flourish – Manufacturing ISM Report

54 Flares Twitter 22 Facebook 21 Google+ 9 Pin It Share 2 LinkedIn 0 Buffer 0 Filament.io 54 Flares ×

ism Economic activity expanded in the manufacturing industry for the third month in a row and the overall economy grew for the 45th consecutive month.

All five PMI’s component indexes: new orders, production, employment, supplier deliveries and inventories remained in positive turf, as was the case in January. Even though Economists had expected the PMI to fall to 52.5, this month’s reading of 54.2% reflects the highest PMI since June 2011 when the index registered at 55.8 percent. A PMI index in excess of 42.2, over a period of time generally indicates an expansion in the overall economy. The New Orders index registered 57.8 percent indicating growth for the second consecutive month. All growing as well, in February, are Backlog of Orders, Exports and Imports Indexes.

Fifteen manufacturing industries are reporting growth out of 18, including Fabricated Metal Products, Machinery and Primary Metals. A Machinery respondent says, “Automotive is still going strong, which allows budgeting for capital equipment.” Along with positive feedback, one Fabricated Metal Products panelist still cites a long-standing concern, “Workload is growing; need qualified machinists.”

In February, one of two new trends includes Backlog of Orders. The last indication of growth in order backlogs was March 2012, when the index registered 52.5 percent. In this report eighty-three percent of respondents reported their backlog of orders. Twenty-six percent of respondents reported greater backlogs, 16 percent reported smaller backlogs and 58 percent reported no change from January. Imports are also growing for the second time in the past three months registering at 54 percent. The Imports Index is four percentage points higher than in January, when it registered at 50 percent. January’s index was down from 51.5 percent in December.

Manufacturing ISM Report

What about the endurance of the 41-month trend of employment growth? The Employment Index registered 52.6 percent in February. This is 1.4 percentage points lower than January’s fifty-four percent. Although an Employment Index above 50.5 percent over time indicates growth, February’s reading signifies a slow down. One of the announcements in President Obama’s State of The Union speech in February was raising the U.S. minimum wage rate to $9/hr. When applying some common-sense economics to the aftereffects of a minimum wage rate increase on employment rates, it may go something like Nouseconomics’s article “Good Thinking, Let’s Slow Employment Growth Even More”. Author Justin Vélez-Hagan explains:

The minimum wage rate, which is currently $7.25 per hour, is only offered and accepted when the value of the labor is greater than or equal to the wage they are offering.  Currently if a company wants to hire labor that they value at $7.00 per hour, they will not hire an employee and inefficiencies occur.  The company now has an extra $7 per hour that they would love to spend on a new employee, but instead will retain until the value they place on that position’s work exceeds $7.25.  This is inherently inefficient and creates unemployment… When you raise a firm’s costs, or all firms’ costs within an industry, or the entire market’s costs, aggregate employment decreases, efficiency decreases, and American firms suffer.

According to the February Manufacturing ISM Report On Business, the overall economy and economic activity in the manufacturing sector maintained growth.

While there are some favorable signs emerging concerning the U.S. economy, there are still political and global headwinds that could slow growth. We’ll keep our eyes peeled on manufacturing production, which is expected to show growth of 2.2% in 2013 and 3.6% in 2014.

Paragraph-separator

Therese Yacenda is the Social Media Manager at Accelerated Buy Sell, Inc. and Manufacturing Web Solutions as well as a contributing author to the blog. She orchestrates the social media landscape for the “Accelerated Group of Companies” that provides tools and services to help manufacturers grow and exit strategies to maximize dollars when they are ready to retire or sell their manufacturing business. Accelerated’s group of companies that provide services to the manufacturing industry includes:

www.AcceleratedBuySell.com – Provides Online Industrial Auction Services, Used Equipment Auctions, Capital Equipment Auctions, Plant Liquidations, Industrial Plant Cleanout Services, Used Machinery Location Services, Certified Machine Tool and Equipment Appraisals, and more.

www.AcceleratedMfgBrokers.com – Specializes in Manufacturing Business Brokerage and Mergers and Acquisitions.  We help manufacturers develop exit strategies to maximize retirement dollars, and successful manufacturers expand through acquisition of other manufacturing companies, product lines and customer lists.  Manufacturing Companies for sale throughout the United States are listed on this site.

www.AcceleratedRE.com – Provides Industrial Real Estate Brokerage Services, Online Real Estate Auctions, Sealed Bid Real Estate Auctions and complete industrial facility cleanout services.

www.IgniteMfg.com – Provides funding for products made in the USA, and engineering/manufacturing educational needs through Crowd Funding.

www.MfgWebSolutions.com – Provides web development and social media services for manufacturers at under-market rates.

Therese Yacenda is a contributing author to:

blog.AcceleratedBuySell.com - A site that provides the latest manufacturing news, statistics and opinion.   It also provides information on how to grow a manufacturing business, and what to do if you are a manufacturing company that needs to close.

MFGWebSolutions.com/blog - Provides the latest information on social media and web development for manufacturers.  It gives manufacturers tips and tricks for boosting their web presence.

About Therese Yacenda

Therese Yacenda cultivates the social at Accelerated Buy Sell, Inc., regularly contributes to the blog and composes the monthly newsletter, putting out information to empower the Manufacturing Industry. In July of 2012 the Accelerated Group of companies launched AcceleratedWebSolutions.net where Therese manages the social media content strategies that create a strong web presence for clients.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>