ISM Manufacturing Index at lowest point in almost three years

The ISM manufacturing index drops to its lowest point since 2016.

US flag after ISM PMI survey Source: Bloomberg

The US Institute Manufacturing Index’s (ISM) Purchasing Managers’ Index( PMI) went down to 54.2% in February. The drop from 56.6 brings the index to its lowest point since 2016. The Institute for Supply Management’s survey showed that manufacturing executives are concerned about growth in the US economy.

ISM PMI: key figures

New Orders 55.5%
Production Index 54.8%
Employment Index 52.3%
Supplier Deliveries 54.9%
Inventories Index 52.3%
Prices Index 49.4%

Which ISM PMI numbers were up and which were down?

The new orders index fell by 2.7% to 55.5%. The production index declined 5.7% to 54.8%. The employment index, supplier deliveries, and price indexes also all had weaker numbers and dropped by up to 2%.

While many indexes slumped, there was positive news from the survey. The inventories index rose 0.6% to 53.4%. There were also lower prices for raw materials for two months in a row and 16 of the 18 company executives reported growth.

What did US manufacturers say in the ISM PMI survey?

The executives in the survey noted how was for them in February 2019. Some of them reported stagnation in their businesses.

‘General business conditions started to slow at the end of January, continuing through February,’ said an executive at a plastics and rubber company.

‘Business so far this year is meeting, but not exceeding, our forecast,’ said another senior executive at a fabricated metals company.

What does the ISM PMI survey mean for the US economy?

Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, noted that the survey had mixed results for the state of the US economy.

‘Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month. Consumption (production and employment) continued to expand but fell a combined 8.9 points from the previous month’s levels,’ said Fiore.

Fiore also noted that exports were up, as noted by the US Commerce Department.

‘Exports continue to expand, at slightly stronger rates compared to January,’ said Fiore.

Though there was mostly disappointing news about the ISM PMI, Fiore said that the survey indicated that February 2019 was still a solid month for manufacturing.

‘It was a stable month. Nothing wrong with a stable month,’ said Fiore.

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