Latest ISM study shows growth, machinery market contraction

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A recent Institute for Supply Management (ISM) study on the manufacturing industry reported growth in most areas, although the machinery market has seen some contraction, the Associated Equipment Distributors (AED) said on Monday.

Overall the Purchasing Managers' Index (PMI) was at 53.5 percent for June, following a trend of 73 months of consecutive growth.

Among the growth reported in many sectors of the manufacturing industry, machinery, petroleum and coal, plastics and rubber products, and primary metals saw contractions.

In the AED report, respondents in the machinery category indicated slowdown in business that has impacted sales. The downturn in oil and petroleum can be tied to the global downturn in oil process that occurred in the late part of 2014 and earlier this year.

Of 18 sectors within the manufacturing industry, 11 saw growth in June. Furniture and related products, wood, non-metallic minerals, and manufacturing of food and beverage products were among those that saw significant growth.

A PMI report more than 50 percent generally means that the industry is seeing stable growth, the AED said. This month's index number is 0.7 percent above the 52.8 percentage that was reported in May.

“The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (52.6 percent) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annualized basis," Bradley Holcomb, chair of the ISM, said. "In addition, if the PMI for June (53.5 percent) is annualized, it corresponds to a 3.3 percent increase in real GDP annually.”

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Institute for Supply Management

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