What’s the best way to measure manufacturing’s strength? Which metrics matter the most, and what can manufacturers learn by comparing data from America’s manufacturing and non-manufacturing sectors? The Institute for Supply Chain Management (ISM) publishes monthly reports with sector-specific data such as employment and new orders. The ISM’s reporting also supports some interesting sector comparisons.
For example, June 2015 was the 30th consecutive month in which economic activity in the manufacturing sector grew. During this time, manufacturing employment increased by 3.8% and prices remained unchanged. June 2015 was also the 65th consecutive month in which the non-manufacturing sector grew; however, non-manufacturing employment fell by 2.6% and prices plunged by nearly 3%.
Two ISM indices, the Purchasing Managers’ Index (PMI) and the Non-Manufacturing Index (NMI), also support sector comparisons. In June 2015, the manufacturing sector’s PMI reached 53.5% because of strong growth in new orders, production, and employment. Meanwhile, the non-manufacturing sector’s NMI/PMI reached 56% because of strong business activity despite falling employment.
Industry-specific data is also worth analyzing. Of the 18 manufacturing industries that ISM studied, 11 grew during June. Furniture & Related Products led the way, followed by Wood Products and Nonmetallic Mineral Products. During this same time period, four manufacturing industries contracted: Petroleum & Coal Products, Primary Metals, Plastic & Rubber Products, and Machinery.
Given all of this information, what conclusions can you draw about the strength of U.S. manufacturing? Which metrics matter most, are comparisons to non-manufacturing useful, and do you see any significance in the industry-specific data?
