February 2011 Manufacturing Index Summaries

February 2011 Manufacturing Index Summaries

(as reported by the Institute for Supply Management)

PMI
Manufacturing continued its rapid growth in February as the PMI registered 61.4 percent, an increase of 0.6 percentage point when compared to January's reading of 60.8 percent. This is also the highest PMI reading since May 2004 when the index also registered 61.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Month PMI
Feb 2011 61.4
Jan 2011 60.8
Dec 2010 58.5
Nov 2010 58.2

New Orders
ISM's New Orders Index registered 68 percent in February, which is an increase of 0.2 percentage point when compared to the 67.8 percent reported in January. This is the 20th consecutive month of growth in the New Orders Index. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

New Orders % Better % Same % Worse Net Index
Feb 2011 43 46 11 +32 68.0
Jan 2011 46 36 18 +28 67.8
Dec 2010 31 47 22 +9 62.0
Nov 2010 30 45 25 +5 59.6

Production
ISM's Production Index registered 66.3 percent in February, which is an increase of 2.8 percentage points from the January reading of 63.5 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the 21st consecutive month the Production Index has registered above 50 percent.

Production % Better % Same % Worse Net Index
Feb 2011 43 47 10 +33 66.3
Jan 2011 40 44 16 +24 63.5
Dec 2010 30 52 18 +12 63.0
Nov 2010 26 54 20 +6 58.2

Employment
ISM's Employment Index registered 64.5 percent in February, which is 2.8 percentage points higher than the 61.7 percent reported in January. This is the 17th consecutive month of growth in manufacturing employment. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Employment % Higher % Same % Lower Net Index
Feb 2011 35 56 9 +26 64.5
Jan 2011 24 69 7 +17 61.7
Dec 2010 22 66 12 +10 58.9
Nov 2010 25 65 10 +15 59.0

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in February as the Supplier Deliveries Index registered 59.4 percent, which is 0.8 percentage point higher than the 58.6 percent registered in January. This is the 21st consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

Supplier Deliveries % Faster % Same % Slower Net Index
Feb 2011 7 69 24 +17 59.4
Jan 2011 5 77 18 +13 58.6
Dec 2010 7 78 15 +8 56.7
Nov 2010 5 77 18 +13 58.1

Inventories
Manufacturers' inventories declined in February following seven consecutive months of growth. The Inventories Index registered 48.8 percent, 3.6 percentage points less than the 52.4 percent recorded for January. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

Inventories % Higher % Same % Lower Net Index
Feb 2011 19 63 18 +1 48.8
Jan 2011 25 54 21 +4 52.4
Dec 2010 24 52 24 0 51.8
Nov 2010 25 58 17 +8 56.1

New Export Orders
ISM's New Export Orders Index registered 62.5 percent in February, which is 0.5 percentage point higher than the 62 percent reported in January. This is the 20th consecutive month of growth in the New Export Orders Index.

New Export Orders % Reporting % Higher % Same % Lower Net Index
Feb 2011 81 31 63 6 +25 62.5
Jan 2011 81 30 64 6 +24 62.0
Dec 2010 81 21 67 12 +9 54.5
Nov 2010 81 23 68 9 +14 57.0

For further information on the current Manufacturing Index, please contact Don Applegarth.

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Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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