Tempe, AZ, Jun. 1--Economic activity in the manufacturing sector grew in May for the 12th consecutive month, while the overall economy grew for the 31st consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector grew at a faster rate in May, continuing its recent strong performance. The rate of growth in New Orders and Production slowed slightly but was offset by a significant increase in Employment. Employment has not registered this high since April 1973, when it registered 62.6%."
ISM's Backlog of Orders Index indicates that order backlogs increased in May, and the Employment Index grew for the seventh consecutive month. ISM's Prices Index indicates that manufacturers once again experienced higher prices in their purchases. The New Export Orders and Import Indexes continue to grow in May.
Comments from respondents indicate demand is strong in most industries, but they also express major concerns about rising materials prices and the cost of energy in particular. A number of respondents mention adding permanent jobs, as well as adding temporary and seasonal workers. While there are mentions of allocation, extended leadtimes and low inventories, it appears that members are able to work through these issues at this time.
ISM's PMI registered 62.8% in May, an increase of 0.4% when compared to 62.4% in April. ISM's New Orders Index declined 2.2% from 65% in April to 62.8% in May. ISM's Production Index decreased 2.2% from 67% in April to 64.8% in May. The ISM Employment Index is at 61.9% for May, an increase of 4.1% when compared to the 57.8% reported in April.
ISM's Supplier Deliveries Index registered 69.4%, 2.3% higher than April's 67.1%. ISM's Inventories Index registered 49.3% in May, up from the 44.8% reported in April. ISM's Customers' Inventories Index for May is at 37%, a decrease of 3.5% compared to the April reading of 40.5%. ISM's Prices Index in May is 86%, 2% lower than the 88% reported in April.
ISM's Backlog of Orders Index decreased 3.5%, registering 63% in May compared to 66.5% in April. ISM's New Export Orders Index registered 60.6%, a decrease of 0.4% from April's 61%. ISM's Imports Index increased 1.3% to 59.8% in May, up from 58.5% in April.
"It appears that second-quarter growth will be very solid, and the momentum should carry over into the second half of the year. 2004 is shaping up as one of the better years for manufacturing. Many respondents indicate that order backlogs are growing for the first time in several years," said Ore.
