|
FOR RELEASE: November 1, 2000
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire United States, while the regional reports cover only their local vicinity. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of October 2000. MANUFACTURING CONTINUES TO SLOW IN OCTOBER SAY PURCHASING EXECUTIVES IN LATEST MANUFACTURING NAPM REPORT ON BUSINESS®
Purchasing Managers' Index (PMI) at 48.3% |
Series | October Index | Direction Oct vs Sep | Rate of Change Oct vs Sep |
PMI | 48.3 | Contracting | Faster |
Production | 48.4 | Contracting | From Growing |
New Orders | 48.0 | Contracting | Faster |
Backlog of Orders | 41.0 | Contracting | Faster |
Supplier Deliveries | 51.4 | Slower | From Faster |
Inventories | 45.4 | Contracting | Faster |
Employment | 47.9 | Contracting | From Growing |
Prices | 56.5 | Increasing | Slower |
New Export Orders | 48.3 | Contracting | From Growing |
Imports | 51.8 | Growing | Faster |
Overall Economy | Growing | Slower |
Manufacturing | Contracting | Faster |
The Purchasing Managers' Index (PMI) indicates that the manufacturing economy failed to grow during the month of October with an index of 48.3 percent. This is the third consecutive month that the manufacturing sector has failed to grow. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 42.4 percent, over a period of time, generally indicates an expansion of the overall economy. Ore added, "The past relationship between the PMI and the overall economy indicates that the average PMI for the months of January through October (52.8 percent) corresponds to a 3.7 percent annual increase in real gross domestic product (GDP). However, if the PMI for October (48.3 percent) turned out to be the annual average for 2000, this would correspond to a 2.1 percent increase in GDP."
Month | Oct’00 | Sep’00 | Aug’00 | Jul‘00 | Jun’00 |
PMI% | 48.3 | 49.9 | 49.5 | 51.8 | 51.8 |
Month | May’00 | Apr’00 | Mar’00 | Feb’00 | Jan’00 |
PMI% | 53.2 | 54.9 | 55.8 | 56.9 | 56.3 |
Month | Dec’99 | Nov’99 | Oct’99 | Sep’99 | Aug’99 |
PMI% | 56.8 | 57.1 | 56.9 | 57.3 | 54.4 |
NAPM's Production Index declined to 48.4 percent in October down from 52.1 percent in September. This is the second time in three months that the Index has fallen below 50 percent. Of the 20 industries reporting, only three indicated growth in production.
An index above 49.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. Industries showing the highest rate of growth in production for October were (listed in order): Food; Wood & Wood Products; and Chemicals.
Production | %Better | %Same | %Worse | Net | Index |
October 2000 | 23 | 52 | 25 | -2 | 48.4 |
September 2000 | 26 | 54 | 20 | +6 | 52.1 |
August 2000 | 16 | 63 | 21 | -5 | 48.7 |
July 2000 | 19 | 63 | 18 | +1 | 53.4 |
NAPM's New Orders Index failed to grow in October for the fourth consecutive month; prior to July, the index grew for 18 consecutive months. The index at 48 percent represents a decrease of 1.1 percentage points when compared to 49.1 percent in September, and provides insight as to the weakness of manufacturing orders. A New Orders Index above 50.4 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 1987 dollars).
For the month of October, six industries reported higher rates of increase in new orders. They were (listed in order): Furniture; Glass, Stone & Aggregate; Apparel; Food; Wood & Wood Products; and Electronic Components & Equipment.
New Orders | %Better | %Same | %Worse | Net | Index |
October 2000 | 22 | 49 | 29 | -7 | 48.0 |
September 2000 | 27 | 47 | 26 | +1 | 49.1 |
August 2000 | 21 | 57 | 22 | -1 | 49.7 |
July 2000 | 23 | 56 | 21 | +2 | 49.9 |
The Backlog of Orders Index failed to grow for the sixth consecutive month in October. NAPM’s Backlog of Orders Index (not seasonally adjusted) registered 41 percent, a very significant drop in manufacturers’ backlogs. Of the 88 percent of respondents who measure their backlog of orders, 14 percent reported greater backlogs, 32 percent reported smaller backlogs, and 54 percent reported no change from September. Only two industries reported an increase in backlog of orders during the month: Tobacco and Food.
Backlog of Orders | %Reporting | %Greater | %Same | %Less | Net | Index |
October 2000 | 88 | 14 | 54 | 32 | -18 | 41.0 |
September 2000 | 90 | 22 | 50 | 28 | -6 | 47.0 |
August 2000 | 88 | 23 | 52 | 25 | -2 | 49.0 |
July 2000 | 90 | 17 | 56 | 27 | -10 | 45.0 |
NAPM's Supplier Deliveries Index in October indicates delivery performance is slower when compared to September with an index of 51.4 percent (an index below 50 indicates faster delivery performance). The index is 2.1 percentage points higher than September’s 49.3 percent. The industries reporting slower supplier deliveries in October were: Tobacco; Primary Metals; Wood & Wood Products; Industrial & Commercial Equipment & Computers; Electronic Components & Equipment; Paper; and Food.
Supplier Deliveries | %Slower | %Same | %Faster | Net | Index |
October 2000 | 9 | 85 | 6 | +3 | 51.4 |
September 2000 | 8 | 84 | 8 | 0 | 49.3 |
August 2000 | 12 | 85 | 3 | +9 | 53.1 |
July 2000 | 13 | 84 | 3 | +10 | 54.2 |
NOTE: A list of commodities in short supply is available at the end of this report.
Manufacturers' inventories are still being liquidated as the Inventories Index registered 45.4 percent, down from 45.9 percent in September. An Inventories Index greater than 41.1 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (constant 1987 dollars). The four industries reporting higher inventories in October over September were: Wood & Wood Products; Printing & Publishing; Instruments & Photographic Equipment; and Food.
Inventories | %Higher | %Same | %Lower | Net | Index |
October 2000 | 13 | 65 | 22 | -9 | 45.4 |
September 2000 | 15 | 63 | 22 | -7 | 45.9 |
August 2000 | 17 | 63 | 20 | -3 | 47.8 |
July 2000 | 13 | 69 | 18 | -5 | 48.4 |
NAPM’s Manufacturing Employment Index fell below 50 percent in October after a recovery in September. The index registered 47.9 percent in October compared to 50.9 percent in September, a decrease of 3 percentage points. An Employment Index above 47.2 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment. Five industries indicated growth in employment: Petroleum; Furniture; Wood & Wood Products; Rubber & Plastic Products; and Chemicals.
Employment | %Higher | %Same | %Lower | Net | Index |
October 2000 | 12 | 70 | 18 | -6 | 47.9 |
September 2000 | 16 | 67 | 17 | -1 | 50.9 |
August 2000 | 14 | 68 | 18 | -4 | 48.2 |
July 2000 | 19 | 68 | 13 | +6 | 52.7 |
NAPM’s Price Index indicates manufacturers continued to pay higher prices in October. With the index at 56.5 percent, there is a slight deceleration as the index is 1.6 percentage points lower than September’s 58.1 percent. In October, 29 percent of purchasing executives reported paying higher prices and 11 percent reported paying lower prices, while 60 percent reported that prices were unchanged from the preceding month.
A Price Index below 46.3 percent, over time, is generally consistent with a decrease in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices. The 12 industries paying higher prices were: Textiles; Paper; Rubber & Plastic Products; Petroleum; Food; Instruments; Chemicals; Apparel; Printing & Publishing; Transportation & Equipment; Electronic Components & Equipment; and Industrial & Commercial Equipment & Computers.
Prices | %Higher | %Same | %Lower | Net | Index |
October 2000 | 29 | 60 | 11 | +18 | 56.5 |
September 2000 | 29 | 63 | 8 | +21 | 58.1 |
August 2000 | 27 | 66 | 7 | +20 | 56.2 |
July 2000 | 33 | 60 | 7 | +26 | 61.9 |
NOTE: A list of commodities up in price and down in price is available at the end of this report.
NAPM's New Export Orders Index for October failed to grow during October after 20 consecutive months of growth. This is particularly significant when compared to historical data for the Index which indicates that there have been only 15 months since its inception in January 1988 that the Index has been negative, and 14 of the 15 came shortly after the Asian financial crisis. NAPM’s New Export Orders Index declined 2 percentage points to 48.3 percent from 50.3 percent in September. Industries reporting growth in new export orders in October were: Food and Fabricated Metals.
New Export Orders | %Exporting | %Better | %Same | %Worse | Net | Index |
October 2000 | 77 | 5 | 83 | 12 | -7 | 48.3 |
September 2000 | 77 | 14 | 77 | 9 | +5 | 50.3 |
August 2000 | 78 | 12 | 79 | 9 | +3 | 50.7 |
July 2000 | 79 | 13 | 78 | 9 | +4 | 51.5 |
Imports of materials by manufacturers grew in October as the Imports Index registered 51.8 percent, a 1.3 percentage points increase when compared to September’s report of 50.5 percent. The six industries reporting growth in import activity for October were: Leather; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Fabricated Metals; Wood & Wood Products; Industrial & Commercial Equipment & Computers; and Chemicals.
Imports | %Importing | %Higher | %Same | %Lower | Net | Index |
October 2000 | 75 | 13 | 78 | 9 | +4 | 51.8 |
September 2000 | 76 | 10 | 82 | 8 | +2 | 50.5 |
August 2000 | 80 | 13 | 79 | 8 | +5 | 51.9 |
July 2000 | 77 | 11 | 78 | 11 | 0 | 49.8 |
Average commitment leadtime for Capital Expenditures declined 8 days to 111 days. Average leadtime for Production Materials declined 10 days to 42 days. Average leadtime for Maintenance, Repair, and Operating (MRO) supplies remained the same at 22 days.
Percent Reporting | |||||||
Hand to Mouth | 30 Days | 60 Days | 90 Days | 6 Mos. | 1 Year+ | Avg.Days | |
Capital Expenditures | |||||||
October 2000 | 18 | 7 | 16 | 23 | 29 | 7 | 111 |
September 2000 | 17 | 10 | 13 | 19 | 32 | 9 | 119 |
August 2000 | 21 | 9 | 12 | 20 | 27 | 11 | 117 |
July 2000 | 18 | 10 | 15 | 22 | 24 | 11 | 116 |
Production Materials | |||||||
October 2000 | 24 | 44 | 21 | 7 | 3 | 1 | 42 |
September 2000 | 25 | 39 | 20 | 10 | 2 | 4 | 52 |
August 2000 | 24 | 40 | 25 | 8 | 3 | 0 | 41 |
July 2000 | 22 | 38 | 27 | 7 | 5 | 1 | 48 |
MRO Supplies | |||||||
October 2000 | 52 | 35 | 10 | 3 | 0 | 0 | 22 |
September 2000 | 51 | 35 | 12 | 2 | 0 | 0 | 22 |
August 2000 | 52 | 33 | 10 | 4 | 1 | 0 | 24 |
July 2000 | 48 | 36 | 14 | 2 | 0 | 0 | 23 |
Caustic Soda – 2nd month; Copper – Beryllium; Electronic Components – 2nd month; and Integrated Circuits – 2nd month.
Caustic Soda – 4th month; Copper – 4th month (also shown down in price); Diesel Fuel; Fuel Oil; Natural Gas – 10th month; Nickel; Petroleum Products – 9th month; Plastics – 12th month; Polyester; Resins – 14th month; Solvents; and Stainless Steel.
Aluminum; Copper (also shown up in price); Hot Rolled Steel – 2nd month; and Steel – 5th month.
The Manufacturing NAPM Report On Business® is based on data compiled from monthly replies to questions asked of purchasing executives in over 350 industrial companies. Membership of the Business Survey Committee is diversified by Standard Industrial Classification (SIC) category, based on each industry's contribution to Gross Domestic Product (GDP). Twenty industries from various U.S. geographical areas are represented on the committee.
Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Employment, and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better, and slower for Supplier Deliveries) and the negative economic direction (lower, worse, and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).
The resulting single index number is then seasonally adjusted to allow for the effects of repetitive intrayear variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to nonmoveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indices for five of the indicators (New Orders, Production, Supplier Deliveries, Inventories, and Employment) with varying weights.
Diffusion indices have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent that it is generally declining. A PMI over 42.4 percent, over a period of time, indicates that the overall economy, or Gross Domestic Product (GDP), is generally expanding, below 42.4 percent, that it is generally declining. The distance from 50 percent or 42.4 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, NAPM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.
Responses to Buying Policy reflect the percent reporting the current month's leadtime, the approximate weighted number of days ahead for which commitments are made for Production Materials, Capital Expenditures, and Maintenance, Repair, and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.
The Manufacturing NAPM Report On Business® is published monthly by the National Association of Purchasing Management, the largest purchasing and supply management research and education organization in the United States. NAPM is comprised of 180 affiliates with more than 45,000 members in the United States. The report has been issued by the association since 1931, except for a four year interruption during World War II.
The full text version of the Manufacturing NAPM Report On Business® is posted on NAPM’s Web site at www.napm.org on the first business day of every month after 10:10 a.m. (ET).
The next Manufacturing NAPM Report On Business® featuring the November 2000 data will be released at 10:00 a.m. (ET) on December 1, 2000.
Past Months'
NAPM Reports on Business® Releases
Back to
Top
Back to
NAPM Reports on Business® main page