ISM: Upward Trend Continues
Sean Murphy, Associate Editor -- Supply Chain Management Review, 6/1/2009
The positive trend in the manufacturing sector continued in May, with the highlight being new orders, which reached its highest level since November of 2007.
May’s report, produced by the Institute for Supply Management (ISM), showed new orders had risen to 51.1 percent, up 3.9 points over April’s numbers. That’s good news both for the manufacturing sector and for the economy as a whole, said Norbert Ore, chair of ISM’s Manufacturing Business Survey Committee.
“New orders are considered the leading indicators of trends,” he said.
In addition, he said, customer inventories continued to drop, down 0.7 points to 32.9 percent, also a sign that new orders will continue to rise.
“Some of the supply chains that were absolutely stuffed with inventory are starting to work through that,” Ore said.
All this is reflected in the Purchasing Mangers Index (PMI), which has also continued its upward trend. The May report showed it was at 42.8 percent, up 2.7 points from April, a growth trend that has been steadily continuing since the beginning of this year.
When asked if the PMI’s upward trend will continue, Ore said, “It has to,” largely due to the increases in new orders and the decreases in inventory.
It’s not all rosy. Consumer spending, Ore said, will not rebound anytime soon. “The consumer is totally terrorized,” he said. In addition, employment dropped by .1 percent in the recent report, he said, which is expected since employment lags behind other economic indicators.
But there’s no doubt, he added, that the economy has passed the low point. Ore said five out of 18 industries—nonmetallic mineral products, plastics and rubber products, machinery, food, beverage and tobacco products, and printing and related support activities, reported growth in May.
“We’re definitely on the up side of the curve now,” he said.
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