Consensus National Futures and Financial On Line Index
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NAPM REPORT ON BUSINESS
Manufacturing Growth Slows In November
Say Purchasing Executives In Latest
NAPM Report On Business
Purchasing Managers' Index (PMI) At 54.4%.
Production And New Orders Growing,
Employment Continues Growth.
Economic activity in the manufacturing sector grew at a slower rate in November than in October. The overall economy continued to grow in November for the seventy-ninth consecutive month say the nation's purchasing executives in the latest NAPM Report on Business.
The Report was issued today by Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Business Survey Committee and corporate purchasing manager, Sonoco Products Company. “The manufacturing sector grew at a slower pace in November than in October with production and new orders continuing to grow, but at slower rates,” said Ore. “Supplier Deliveries continued to indicate slowing delivery performance, while the Backlog of Orders Index lost some momentum and remained unchanged from October. Manufacturing employment continued to grow and NAPM's Price Index retreated to a slower rate of increase when compared to the previous month. Exports and imports are growing at a faster rate than in October. Purchasing executives continue to express optimism with regard to their markets with positive expectations for the balance of the year and considerable momentum going into 1998. Concerns about railroad bottlenecks in the West, lack of confidence in Asian markets, and possible weakening of construction related markets were mentioned most often.”
The Purchasing Managers' Index declined to 54.4% in November from 56.0% in October. NAPM's Production Index decreased 1.4 percentage points from 60.0% to 58.6%. NAPM's New Orders Index decreased 4.5 percentage points from 59.0% in October to 54.5% in November. NAPM's Backlog of Orders Index registered 50.0% indicating no change when compared to October.
NAPM's Supplier Deliveries Index in November indicates deliveries are slowing at a slightly faster rate. The index was up .9 of a percentage point to 55.6% from October's index of 54.7%. The NAPM Employment Index continued to indicate growth in manufacturing employment with an index of 53.5% up from 52.4% in October. NAPM's Price Index in November fell to 51.9%, a decrease of 4.0 percentage points from the October index of 55.9%, indicating a slower rate of price increase for the commodities purchased by manufacturers.
NAPM's Inventories Index showed continued inventory liquidation, but at a faster rate than in October. The Inventories Index receded to 43.4% from 46.5% in October. Responding to a special monthly question concerning customers' inventories of products purchased from the purchasers' organizations, 8% of the purchasing executives felt they were too high (down from 10% in October). On the other hand, 12% (down from 16% in October), felt they were too low and 80% (up from 74% in October), thought they were about right.
NAPM's New Export Orders Index accelerated, rising 2.6 percentage points to 54.2%, remaining above 50% for the past twenty-one months. Imports of materials by manufacturers increased, but at a slightly faster rate as NAPM's Imports Index was up .9 of a percentage point to 52.4% from 51.5% in October.
“The overall picture in November as indicated by growth in production and new orders is one of continued growth in manufacturing activity,” added Ore. “The rate of growth of new orders, production and order backlog, though slowing, is still strong while supplies and deliveries of commodities do not appear to be a significant problem. Nine industries reported paying higher prices, but a comparison of reported price increases and decreases shows that there is double the number of commodities going down in price as opposed to up.”
Of the twenty industries in the manufacturing sector, twelve reported improved business in November. Industries that reported improvement–listed in order–over October were: Furniture; Petroleum; Food; Primary Metals; Rubber & Plastic Products; Transportation & Equipment; Paper; Chemicals; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Fabricated Metals; and Textiles.
“Caustic Soda was the only commodity with reports of being in short supply. Acetone, Caustic Soda, Corrugated Containers, Linerboard, and Natural Gas were the commodities reported with price increases. Commodities with reports of price decreases include Aluminum, Copper, Gold, Natural Gas, Natural Rubber, Nickel, Polyethylene, Polypropylene, Steel, Wastepaper, and Zinc,” Ore stated.
Purchasing Managers' Index (PMI)
The Purchasing Managers' Index (PMI) indicated growth in November with an index of 54.4%, 1.6 percentage points lower than 56.0% in October. This indicates that the manufacturing economy grew at a slower pace in November than it did in October. November is the eighteenth consecutive month that the PMI has indicated manufacturing growth. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
A PMI in excess of 43.9%, over a period of time, generally indicates an expansion of the overall economy. Ore added, “The past relationship between the PMI and the overall economy indicates that the average PMI for the months of January through November (55.2%), if continued for all of 1997, corresponds to a 3.9% increase in real gross domestic product (GDP) for 1997. The PMI for November of 54.4% is equal to a 3.7% increase in real GDP (on an annual basis).”
Index Nov 97 Oct 97 Sep 97 Aug 97 Purchasing Managers' 54.4 56.0 54.2 56.8 Production 58.6 60.0 57.4 62.4 New Orders 54.5 59.0 55.8 60.6 Backlog of Orders 50.0 56.5 50.0 60.0 Supplier Deliveries 55.6 54.7 55.2 55.8 Inventories 43.4 46.5 46.9 42.8 Employment 53.5 52.4 50.7 52.0 Prices 51.9 55.9 54.7 53.8 New Export Orders 54.2 51.6 50.8 55.9 Imports 52.4 51.5 53.1 54.7
December 1, 1997 National Association of Purchasing Managers
Consensus National Futures and Financial On Line Index
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