January 3, 2018

U.S. manufacturing ends 2017 on strong note, ISM survey reports

New orders last month hit highest levels since January 2004, purchasing-group report shows.

By DC Velocity Staff

The U.S. manufacturing economy ended 2017 with broad-based strength, paced by a near 14-year high in new factory orders, according to monthly data published today by the Institute for Supply Management (ISM).

The ISM's manufacturing survey, which each month polls purchasing managers across multiple industries and is considered an accurate gauge of U.S. production, reported that its new-orders index in December hit 69.4 percent, a 5.45-percentage-point increase over November's results and the highest level since January 2004, when the index registered 70.6 percent. The index has registered a reading of above 60 percent for seven consecutive months, ISM said.

Of the 18 industries surveyed, 15 reported an increase in new orders last month, according to the ISM report.

The ISM's Purchasing Managers Index (PMI), which is an aggregation of the various index readings that measure monthly activity, came in last month at 59.7 percent, a 1.5-percent increase over November and far above the 50-percent reading that indicates expansion. Over the 12-month period, the PMI averaged 57.4 percent, the highest full-year average reading since 2004.

Indexes that track employment, production, import and export orders, and order backlogs all showed gains in December. So, too, did raw materials prices; that index was up 3.5 percentage points over November, reaching 69 percent—the 22nd consecutive month of raw materials price increases.

The manufacturing gains filtered down to the shipping level. According to DAT Solutions LLC, a consultancy that tracks non-contract, or spot market, truckload activity, 14 markets reported more than 1 million load postings in 2017, with Atlanta, the busiest market, becoming the first to crack the 2-million barrier. By contrast, in 2016 Atlanta was the only market to surpass 1 million load postings, DAT said.

Despite the increased activity, manufacturers' inventories continued to contract in December, leaving stock quantities at very low levels, ISM said. Timothy R. Fiore, who chairs the committee that oversees the report, said in a statement that the supply chain is having trouble delivering the materials and services needed to maintain adequate production and inventories. Concurrently, the pace of supplier deliveries slowed for the 20th consecutive month, which reflects "continued delivery performance difficulties affecting production expansion," Fiore said.

Resources Mentioned In This Article

Strategy Videos

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.

Subscribe to DC Velocity

Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : U.S. manufacturing ends 2017 on strong note, ISM survey reports">contact Chief Editor David Maloney. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.