Don’t Expect Big Changes in ISM Manufacturing Report

Supply Chain managers may expect more of the same when the next Manufacturing ISM Report On Business featuring the January 2016 data will be released on Monday, February 1.

According to Michael Gravier, Associate Professor of Marketing and Supply Chain Management at Bryant University, we'll see a continued glut in customer inventories and slowing demand for manufactured goods both at home and abroad will hold back further progress – a pattern that will likely hold for much of this year.

“The good news is that, despite market growth concerns abroad with the EU, China, and other key trading partners, the PMI export index should increase again in January, if only slightly, and likely that will also bolster January's PMI just enough to keep it steady or even slightly improve it,” he says.”

Industries that are positioned to do better based upon new orders, increasing order backlogs, and increasing imports and exports include transportation equipment; textile mills; printing and related support activities; miscellaneous manufacturing; plastics and rubber products; and electrical equipment, appliances & components.”

In an interview with SCMR, Gravier noted that some of these industries will compete based on price cuts to reduce inventories, which will boost demand or partially offset the strong dollar.

“Other industries will benefit from lower commodities prices or boosts to consumer spending, observes Gravier.

He adds that health care devices fall under miscellaneous manufacturing.

Industries likely to do worse include computer & electronic products; primary metals; machinery; and chemical products.

“Low oil prices will continue to be a boon to transportation companies, while certain retailers who over-expanded (e.g., Wal-mart, Gap) will continue to struggle due to high inventories and labor costs, as others (e.g., Target, Starbucks) benefit from stronger consumer confidence as consumer preferences continue to evolve,” he forecasts.

As reported in SCMR, economic activity in the manufacturing sector contracted in December for the second consecutive month, while the overall economy grew for the 79th consecutive month.

SC
MR