Supplier Deliveries Slow At Start of 2015, But Businesses Remain Optimistic

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The Institute for Supply Management released its monthly Report on Business earlier this week. Let’s take a look at how the manufacturing sector performed during the first month of 2015.

 

Manufacturing “Expanding,” But at Slower Rate

The good news? The US manufacturing sector continues to improve, the overall economy has expanded, and inventories, production and new orders are growing. The bad news? All of these areas grew at a slower rate in January than the month prior. For instance, the ISM PMI came in at 53.5% in January, down from the 55.1% in December. New Orders fell nearly 5% last month and the production index shed 1.2% from December.

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What’s worse - supplier deliveries took a dive in January. The ISM supplier deliveries index moved from 58.6 in December to 52.9 in January - a drop of nearly 6%. Metals, plastics & rubber products, transportation equipment, food & beverage and electronics were some of the industries that reported slower supplier deliveries in January, specifically.

West Coast Ports Continue to Delay Business

Some are pointing to the West Coast port slowdowns as reasons to current issues in manufacturing, such as a backlog of orders. Almost 20% of survey respondents reported a backlog of orders - among them were those in the wood products, primary metals and fabricated metal product industries.

Growth from Last Year

The US manufacturing sector is performing better than in the same month last year, however. The January 2014 ISM PMI was 51.3% - lower than the 53.3% from this year. New orders were also up this year compared to last (52.9 in January 2015 vs. 51.2 in January 2014. Production is up (56.5 vs. 54.8) as is employment (54.1 vs. 52.3).

Supplier deliveries also struggled in January 2014, with ISM reporting the index was slowing at the time. Ten industries reported slowing deliveries last year as well, including electronics, primary metals, plastics & rubber and transportation equipment - similar to this year’s report.

Optimistic Respondents

ISM survey respondents for the January report are optimistic regarding production and increasing customer demands. One respondent from the computer & electronic industry noted how the declining global oil prices have not impacted continued strong sales performance. And, despite slowed supply deliverables from metal industries, respondents in those areas say 2015 business has started at a “fast pace,” and new opportunities are opening up.

Our sister site, MetalMiner, releases February's industrial metal price indexes this week – check 'em out.

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