ISM Report On Business®

[14] INSIDE SUPPLY MANAGEMENT SEPTEMBER 2013 w w w.ism.ws

PMI 53.1% 2009

201320122011

42.2% = Overall EconomyBreakeven Line

PMI™at 55.7%

APMI™ in excess of 42.2 percent, over a period of time, generally indicates an expan-sion of the overall economy. Therefore, the August PMI™ indicates growth for the

51st consecutive month in the overall economy, and indicates expansion in the manufac-turing sector for the third consecutive month. The past relationship between the PMI™ and the overall economy indicates that the average PMI™ for January through August (52.5 percent) corresponds to a 3.2 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI™ for August (55.7 percent) is annualized, it corresponds to a 4.2 percent increase in real GDP annually.

New Orders, Production and Employment Growing; Inventories Contracting; Supplier Deliveries Slowing

PMI™

MANUFACTURING AT A GLANCE

INDEXAUG

INDEXJUL

INDEX% POINT CHANGE

DIRECTIONRATE OF CHANGE

TREND* (MONTHS)

PMI™ 55.7 55.4 +0.3 Growing Faster 3

New Orders 63.2 58.3 +4.9 Growing Faster 3

Production 62.4 65.0 -2.6 Growing Slower 3

Employment 53.3 54.4 -1.1 Growing Slower 2

Supplier Deliveries 52.3 52.1 +0.2 Slowing Faster 2

Inventories 47.5 47.0 +0.5 Contracting Slower 2

Customers’ Inventories 42.5 47.5 -5.0 Too Low Faster 21

Prices 54.0 49.0 +5.0 Increasing From Decreasing 1

Backlog of Orders 46.5 45.0 +1.5 Contracting Slower 4

Exports 55.5 53.5 +2.0 Growing Faster 9

Imports 58.0 57.5 +0.5 Growing Faster 7

OVERALL ECONOMY Growing Faster 51

MANUFACTURING SECTOR Growing Faster 3

*Number of months moving in current direction. Manufacturing ISM Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.

COMMODITIES REPORTEDCommodities Up in Price: Corrugated Boxes (13); Corrugated Packaging (4); Lumber; Oil (2); Oil Based Products (2); Plastic Resin (2); Polypropylene (3); Steel – Cold Rolled; and Steel – Hot Rolled (2).

Commodities Down in Price: Corn; Stainless Steel Surcharges; Steel (5); Sugar (4); and Sulfuric Acid.

Commodities in Short Supply: No commodities are listed in short supply.

‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Note: The number of consecutive months the

commodity is listed is indicated after each item.

E conomic activity in the manufac-turing sector expanded in August for the third consecutive month,

and the overall economy grew for the 51st consecutive month, say the nation’s supply executives in the latest Manufac-turing ISM Report On Business®.

The PMI™ registered 55.7 percent, an increase of 0.3 percentage point from July’s reading of 55.4 percent. August’s PMI™ reading reflects the highest of the year. The New Orders Index increased in August by 4.9 percentage points to 63.2 percent, and the Production Index decreased by 2.6 percentage points to 62.4 percent. The Employment Index registered 53.3 percent, a decrease of 1.1 percentage points compared to July’s reading of 54.4 percent. The Prices Index registered 54 percent, increasing 5 percentage points from July. Comments from the panel range from slow to improving business condi-tions depending upon the industry.

Of the 18 manufacturing industries, 15 are reporting growth in August in the fol-lowing order: Textile Mills; Wood Prod-ucts; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Fabricated Metal Products; Transportation Equip-ment; Machinery; Chemical Products; and Paper Products. ISM

Analysis by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee.

ISM Report On Business®

AUGUST 2013

Customer Inventories (Manufacturing) 48.5%201320122011

Backlog of Orders (Manufacturing) 47.5%201320122011

New Export Orders (Manufacturing) 50.5%201320122011

Imports (Manufacturing) 50%201320122011

Prices (Manufacturing) 56.5%201320122011

49.7% = B.L.S. Prducer Prices Index forIntermediate Materials Breakeven Line

Production (Manufacturing) 53.6%201320122011

51.2% = Census Bureau Mfg.Breakeven Line

Employment (Manufacturing)201320122011

54%

50.5% = B.L.S. Mfg.Employment

Breakeven Line

Supplier Deliveries (Manufacturing)201320122011

53.6%

52.3%

Inventories (Manufacturing) 51% 201320122011

42.7% = B.E.A. Overall Mfg.Inventories Breakeven Line

New Orders (Manufacturing) 53.3%201320122011

52.2% = Census Bureau Mfg.Breakeven Line

ISM Report On Business®

AUGUST 2013 — MANUFACTURING

‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

PRODUCTIONISM’s Production Index registered

62.4 percent in August. Fifteen

industries reported growth in

production during the month of

August: Textile Mills; Electrical

Equipment, Appliances & Components; Wood Products; Plastics & Rubber

Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products;

Primary Metals; Printing & Related Support Activities; Computer & Electronic

Products; Paper Products; Fabricated Metal Products; Furniture & Related

Products; Chemical Products; Machinery; and Transportation Equipment.

NEW ORDERSISM’s New Orders Index registered

63.2 percent in August. The 12

industries reporting growth in

new orders in August — listed in

order — are: Textile Mills; Wood

Products; Nonmetallic Mineral Products; Computer & Electronic Products;

Furniture & Related Products; Food, Beverage & Tobacco Products; Plastics &

Rubber Products; Electrical Equipment, Appliances & Components; Chemical

Products; Fabricated Metal Products; Transportation Equipment; and Paper

Products.

EMPLOYMENTISM’s Employment Index regis-

tered 53.3 percent in August,

which is 1.1 percentage points

lower than the 54.4 percent

reported in July. Of the 18 manu-

facturing industries, seven reported growth in employment in August in the fol-

lowing order: Wood Products; Plastics & Rubber Products; Food, Beverage &

Tobacco Products; Printing & Related Support Activities; Furniture & Related

Products; Fabricated Metal Products; and Electrical Equipment, Appliances &

Components.

SUPPLIER DELIVERIESThe delivery performance of

suppliers to manufacturing orga-

nizations slowed in August at a

slightly faster rate relative to July

as the Supplier Deliveries Index registered 52.3 percent. The eight industries

reporting slower supplier deliveries in August — listed in order — are: Textile

Mills; Wood Products; Primary Metals; Electrical Equipment, Appliances &

Components; Fabricated Metal Products; Food, Beverage & Tobacco Products;

Machinery; and Chemical Products.

INVENTORIESThe Inventories Index registered

47.5 percent in August, which is

0.5 percentage point higher than

the 47 percent reported in July.

This month’s reading indicates

that respondents are reporting inventories contracted in August for the second

consecutive month. The five industries reporting higher inventories in August are:

Apparel, Leather & Allied Products; Computer & Electronic Products; Transporta-

tion Equipment; Electrical Equipment, Appliances & Components; and Machinery.

CUSTOMERS’ INVENTORIESThe ISM Customers’ Inventories

Index registered 42.5 percent in

August, which is 5 percentage

points lower than in July when the

index registered 47.5 percent. This month’s reading indicates that customers’

inventories are considered too low, and significantly lower than reported

in July. The only manufacturing industry reporting customers’ inventories

as being too high during the month of August is Apparel, Leather & Allied

Products.

PRICESISM’s Prices Index registered 54

percent in August, which is an

increase of 5 percentage points

compared to the July reading of 49

percent. Of the 18 manufacturing

industries, nine reported paying increased prices during the month of August

in the following order: Textile Mills; Wood Products; Apparel, Leather & Allied

Products; Fabricated Metal Products; Plastics & Rubber Products; Miscel-

laneous Manufacturing‡; Chemical Products; Machinery; and Computer &

Electronic Products.

BACKLOG OF ORDERSISM’s Backlog of Orders Index

registered 46.5 percent in

August, which is 1.5 percentage

points higher than the 45 percent

reported in July. This is the fourth consecutive month of contracting order

backlogs. The four industries reporting increased order backlogs in August are:

Apparel, Leather & Allied Products; Computer & Electronic Products; Furniture

& Related Products; and Machinery.

NEW EXPORT ORDERSISM’s New Export Orders Index

registered 55.5 percent in August,

which is 2 percentage points

higher than the 53.5 percent

reported in July. The eight industries reporting growth in new export orders

in August — listed in order — are: Wood Products; Apparel, Leather & Allied

Products; Fabricated Metal Products; Petroleum & Coal Products; Machinery;

Computer & Electronic Products; Electrical Equipment, Appliances & Compo-

nents; and Chemical Products.

IMPORTSISM’s Imports Index registered 58

percent in August, which is 0.5

percentage point higher than the

57.5 percent reported in July. The

10 industries reporting growth in

imports during the month of August — listed in order — are: Wood Products;

Primary Metals; Computer & Electronic Products; Food, Beverage & Tobacco

Products; Fabricated Metal Products; Machinery; Furniture & Related Prod-

ucts; Chemical Products; Transportation Equipment; and Electrical Equipment,

Appliances & Components.

[15]SEPTEMBER 2013 INSIDE SUPPLY MANAGEMENTw w w.ism.ws

201320122011

NMI (Non-Manufacturing) 55.2%

AUGUST 2013

NMI™at 58.6% Business Activity Index at 62.2%; New Orders Index at 60.5%; Employment Index at 57%

E conomic activity in the non-man-ufacturing sector grew in August for the 44th consecutive month,

say the nation’s purchasing and supply executives in the latest Non-Manufac-turing ISM Report On Business®.

The NMI™ registered 58.6 percent in August, 2.6 percentage points higher than the 56 percent registered in July. This indicates continued growth at a faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 62.2 percent, reflecting growth for the 49th consecutive month. The New Orders Index increased by 2.8 percentage points to 60.5 percent, and the Employment Index increased 3.8 per-centage points to 57 percent. The Prices Index decreased 6.7 percentage points to 53.4 percent. The majority of respondents’ comments continue to be mostly positive about business conditions and the direc-tion of the overall economy.

The 16 non-manufacturing industries reporting growth in August — listed in order — are: Educational Services; Man-agement of Companies & Support Services; Information; Accommodation & Food Ser-vices; Public Administration; Construction; Finance & Insurance; Professional, Scien-tific & Technical Services; Retail Trade; Utilities; Transportation & Warehousing; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Other Ser-vices✣; Wholesale Trade; and Health Care & Social Assistance. ISM

Analysis by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee.

NMI™

In August, the NMI™ registered 58.6 percent, indicating continued growth in the non-manufacturing sector for the 44th consecutive month. This month’s NMI™ is the

highest reading for the index since its inception in January 2008. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

COMMODITIES REPORTEDCommodities Up in Price: Beef (9); Contractors; #2 Diesel Fuel; Fuel (8); Labor; Lumber — Pine, Spruce and Treated; Paper; and Shrimp.

Commodities Down in Price: Natural Gas is the only commodity reported down in price.

Commodities in Short Supply: Helium (3); IV Products; and Truck Parts.

✣Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning

& Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).

Note: The number of consecutive months the

commodity is listed is indicated after each item.

NON-MANUFACTURING AT A GLANCE

INDEXAUG

INDEXJUL

INDEX% POINT CHANGE

DIRECTIONRATE OF CHANGE

TREND* (MONTHS)

NMI™ 58.6 56.0 +2.6 Growing Faster 44

Business Activity 62.2 60.4 +1.8 Growing Faster 49

New Orders 60.5 57.7 +2.8 Growing Faster 49

Employment 57.0 53.2 +3.8 Growing Faster 13

Supplier Deliveries 54.5 52.5 +2.0 Slowing Faster 8

Inventories 56.0 53.5 +2.5 Growing Faster 7

Prices 53.4 60.1 -6.7 Increasing Slower 47

Backlog of Orders 50.5 46.5 +4.0 Growing From Contracting 1

New Export Orders 50.5 49.5 +1.0 Growing From Contracting 1

Imports 55.0 50.5 +4.5 Growing Faster 3

Inventory Sentiment 63.5 64.0 -0.5 Too High Slower 195

*Number of months moving in current direction. Non-Manufacturing ISM Report On Business ® data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes.

ISM Report On Business®

AUGUST 2013

SUPPLIER DELIVERIESThe Supplier Deliveries Index reg-

istered 54.5 percent in August. A

reading above 50 percent indicates

slower deliveries, while a reading

below 50 percent indicates faster deliveries. Eleven industries reported slower

deliveries in August: Educational Services; Retail Trade; Professional, Scien-

tific & Technical Services; Information; Real Estate, Rental & Leasing; Utilities;

Construction; Accommodation & Food Services; Health Care & Social Assis-

tance; Wholesale Trade; and Public Administration.

INVENTORIESISM’s Non-Manufacturing Inven-

tories registered 56 percent in

August. The 12 industries reporting

an increase in inventories in August

— listed in order — are: Agricul-

ture, Forestry, Fishing & Hunting; Utilities; Transportation & Warehousing;

Real Estate, Rental & Leasing; Information; Management of Companies & Sup-

port Services; Health Care & Social Assistance; Retail Trade; Accommodation

& Food Services; Construction; Wholesale Trade; and Public Administration.

EMPLOYMENTISM’s Non-Manufacturing Employ-

ment Index registered 57 percent in

August, which reflects an increase

of 3.8 percentage points when

compared to the 53.2 percent

registered in July. The nine industries reporting an increase in employment in

August — listed in order — are: Management of Companies & Support Services;

Information; Finance & Insurance; Other ServicesC; Retail Trade; Public Admin-

istration; Wholesale Trade; Construction; and Accommodation & Food Services.

NEW ORDERSISM’s Non-Manufacturing New

Orders Index registered 60.5

percent in August. The fifteen

industries reporting growth of new

orders in August — listed in order

— are: Educational Services; Utilities; Accommodation & Food Services; Other

ServicesC; Public Administration; Real Estate, Rental & Leasing; Transportation

& Warehousing; Finance & Insurance; Information; Health Care & Social Assis-

tance; Construction; Management of Companies & Support Services; Profes-

sional, Scientific & Technical Services; Wholesale Trade; and Retail Trade.

BUSINESS ACTIVITYISM’s Non-Manufacturing Business

Activity Index in August registered

62.2 percent. Fifteen industries

reported growth of business activity:

Management of Companies & Support Services; Educational Services; Agriculture,

Forestry, Fishing & Hunting; Utilities; Transportation & Warehousing; Finance &

Insurance; Construction; Real Estate, Rental & Leasing; Professional, Scientific &

Technical Services; Accommodation & Food Services; Public Administration; Infor-

mation; Retail Trade; Wholesale Trade; and Health Care & Social Assistance.

IMPORTSThe ISM Non-Manufacturing

Imports Index registered 55

percent in August, which is 4.5

percentage points higher than

the 50.5 percent reported in July.

The eight industries reporting an increase in imports for the month of August

— listed in order — are: Public Administration; Utilities; Transportation & Ware-

housing; Management of Companies & Support Services; Accommodation &

Food Services; Wholesale Trade; Professional, Scientific & Technical Services;

and Retail Trade.

INVENTORY SENTIMENTISM’s Non-Manufacturing Inven-

tory Sentiment Index in August

registered 63.5 percent. The indus-

tries reporting the greatest feeling

that their inventories are too high in August are: Agriculture, Forestry, Fishing &

Hunting; Mining; Other ServicesC; Wholesale Trade; Management of Companies &

Support Services; Arts, Entertainment & Recreation; Health Care & Social Assis-

tance; Utilities; Public Administration; and Accommodation & Food Services.

NEW EXPORT ORDERSThe ISM Non-Manufacturing New

Export Orders Index for August

registered 50.5 percent, which

is 1 percentage point higher than

the 49.5 percent reported in July. The six industries reporting an increase in

new export orders in August — listed in order — are: Transportation & Ware-

housing; Construction; Information; Management of Companies & Support

Services; Public Administration; and Accommodation & Food Services.

BACKLOG OF ORDERSISM’s Non-Manufacturing Backlog

of Orders Index registered 50.5

percent in August, which is 4

percentage points higher than

the 46.5 percent that was reported in July. The seven industries reporting

an increase in order backlogs in August — listed in order — are: Real Estate,

Rental & Leasing; Health Care & Social Assistance; Accommodation & Food

Services; Management of Companies & Support Services; Professional, Scien-

tific & Technical Services; Information; and Construction.

PRICESISM’s Non-Manufacturing Prices

Index for August registered 53.4

percent, 6.7 percentage points

lower than the 60.1 percent

reported in July. Ten non-man-

ufacturing industries reported an increase in prices paid during the month

of August, in the following order: Educational Services; Retail Trade; Accom-

modation & Food Services; Real Estate, Rental & Leasing; Utilities; Wholesale

Trade; Finance & Insurance; Public Administration; Professional, Scientific &

Technical Services; and Health Care & Social Assistance.

Prices (Non-Manufacturing) 51.2%201320122011

New Export Orders (Non-Manufacturing) 53.5% 201320122011

Imports (Non-Manufacturing) 57.5%201320122011

Inventories Sentiment (Non-Manufacturing) 64%201320122011

Backlog of Orders (Non-Manufacturing) 51.5%201320122011

Business Activities (Non-Manufacturing) 56.4% 201320122011

Employment (Non-Manufacturing) 53.3% 201320122011

Supplier Deliveries (Non-Manufacturing) 53% 201320122011

Inventory Change (Non-Manufacturing)201320122011

47%

New Orders (Non-Manufacturing) 54.6%201320122011

ISM Report On Business®

AUGUST 2013 — NON-MANUFACTURING

✣Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services).