PMI on Steady Increase

By Bruce Erickson

November 17, 2009

In October, the PMI or Purchasing Managers Index reported significant gains for the tenth straight month and for the third month over the 50% mark. A PMI over 50 indicated the economy is expanding while anything below the 50% mark indicates the economy is contracting. Since July, rates of growth in manufacturing have outpaced even the dramatic increases of the equity markets.

 

As indicated by the information below compliments of the Institute for Supply Management, although new orders have slowed since September, they are still growing. The only declines are inventories as wholesalers and retailers are still skittish about overstocking. Perhaps the most inspiring data point is employment which has transitioned form contracting to growing. Most of this is in temporary labor and contract labor at this point. But it is evident that as production grows, previous staffing models are going to be spread to thin resulting in new hires going into the new year.

MANUFACTURING AT A GLANCE OCTOBER 2009
Index	Series Index October	Series Index September	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	55.7	52.6	+3.1	Growing	Faster	3
New Orders	58.5	60.8	-2.3	Growing	Slower	4
Production	63.3	55.7	+7.6	Growing	Faster	5
Employment	53.1	46.2	+6.9	Growing	From Contracting	1
Supplier Deliveries	56.9	58.0	-1.1	Slowing	Slower	5
Inventories	46.9	42.5	+4.4	Contracting	Slower	42
Customers' Inventories	38.5	39.0	-0.5	Too Low	Faster	7
Prices	65.0	63.5	+1.5	Increasing	Faster	4
Backlog of Orders	53.5	53.5	0.0	Growing	Same	3
Exports	55.5	55.0	+0.5	Growing	Faster	4
Imports	51.0	52.0	-1.0	Growing	Slower	2
OVERALL ECONOMY				Growing	Faster	6
Manufacturing Sector				Growing	Faster	3