The Institute for Supply Management (ISM) released good news for American factories and manufacturers in early 2017. Data indicates a strong demand for manufactured goods made in the United States. Manufacturing growth continued for the 92nd straight month in January 2017, and there are five straight months of increased purchases from manufacturers.
Statistics
The statistics show manufacturing growth accelerating faster than in previous months. The Purchasing Managers Index (PMI) grew to 56 in January 2017. Any number over 50 shows manufacturing expanding. When numbers go farther away from 50, they reveal a greater pattern of growth. In December, the PMI was 54.5, so manufacturing grew faster at the start of 2017.
New orders grew by 0.1 to 604. on that statistical index, and the production index grew by two points to 61.4 in January 2017. Manufacturing growth climbed for five straight months in terms of purchases, new orders and production. Employment also grew by 3.3 points to 56.1 in January 2017, and that marked four straight months of growth.
Inventories continue to contract slowly, but that's actually a good thing when it comes to manufacturing growth. Slowly declining inventories show that manufacturers move products out of warehouses faster due to better sales. The inventories index had 19 straight months of slow declines as of January 2017, and that number was 48.5 for that month.
Exports grew for the 11th straight month. Imports remained the same for January 2017, but that's mainly because of the raw materials needed for manufacturing. Some of these indexes set new high marks and have two-year highs.
Highs and Records
The 56.4 PMI index translates to a growth of 4 percent in the annual gross domestic product (GDP). The PMI of 56.4 is the highest number on the index since December 2014. The indexes for new orders and production mark highs not seen since November 2014. Bradley J. Holcomb of the ISM says the PMI index number is a record high in terms of manufacturing growth.
What Do These Numbers Mean?
Employment in manufacturing is at a high level in January 2017, despite a manufacturing skills gap between skilled positions that need engineering or mechanical experience versus unskilled labor. Prices in January 2017 dropped a bit, but Holcomb says that is tied to the price of oil. When oil prices go up, the cost of transporting goods rises, so the prices of items also increase. Manufacturing helped create better jobs numbers from the Department of Labor in January 2017, and that's good for job seekers who want high-paying manufacturing jobs.
The growth in manufacturing is somewhat of a surprise to analysts. Some experts believe a combination of a weaker dollar overseas, the perception of a business-friendly Trump administration and higher stock indexes all contribute to a better manufacturing sector.
Manufacturing growth is on a five-month winning streak as of January 2017, and that's fantastic news as the industry bolsters the American economy and the highly competitive labor market. Manufacturers have plenty of well-paying jobs for qualified workers, which means there is a strong demand for labor and manufactured goods.
Photo courtesy of TheLeadSA at Flickr.com
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