For the 12th consecutive month economic activity has expanded in the manufacturing sector according to the Institute for Supply Management (ISM) May 2014 report. The May purchasing managers index (PMI) reached 55.4, an increase of 0.5 from April’s reading and showing a rebound from the weak first quarter generally thought to the result of the harsher than average winter. The average PMI for the last twelve months was 54.9. PMI above 50 generally indicates expansion. Of the 18 manufacturing industries included in the report, 17 reported growth and no industry reported contraction.
Areas of Concern for Manufacturers
While generally steady growth was reported, two areas of concern were noted by some respondents: raw materials pricing and supply tightness and shortages. As a respondent from the fabricated metal products industry stated, “Steel bars required for automotive applications are in high demand. Suppy is very tight and prices are increasing.”
ISM also reported that May was the 60th consecutive month of growth for the overall economy. As ISM’s Manufacturing Business Survey Committee chair, Bradley J. Holcomb, CPSM, CPSD, explained, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through May [53.7] corresponds to a 3.5 percent increase in real gross domestic product on an annualized basis.”