Acquired Electronics360

Industrial & Medical Technology

U.S. Manufacturing Growth Builds Momentum

03 June 2014

Driven in large part by a 5.3 percent increase in production and the strength of new orders, the U.S. manufacturing sector in May expanded for the 12th consecutive month, according to the Institute of Supply Management (ISM). The ISM's leading index, the PMI, increased by 1.8 percent to a level of 55.4 percent for May.

"At 55.4, it's interesting," said Bradley J. Holcomb, chair of the ISM's Manufacturing Business Survey Committee. "For each month since January we have been seeing a month-to-month increase in the PMI, not just in growth but now acceleration."

April's PMI had increased by 1.2 percent from March. "[The PMI] has been nicely moving up for the first five months of the year, and there's continued reason for optimism as May's level is driven in part by new orders," Holcomb said.

A PMI above 50 percent indicates growth in the manufacturing sector; below 50 percent indicates contraction.

The trend initially was more sobering as the PMI was originally reported to be decreasing between April and May. A software glitch resulted in the ISM releasing the wrong numbers during the mid-morning of June 2. The error was corrected in two hours.

New orders increased by 1.8 percent in May to reach 56.9 percent, according to the ISM. Production increased significantly during the month, rising to 61 percent from 55.7 percent the prior period. Respondents to the ISM's monthly survey were generally positive about last month, Holcomb said, citing overall strong demand tempered by some tightness in the supply chain and shortages in raw materials.

In fact, prices increased in May to 60 percent, up from 56.5 percent in April. Semiconductors were among commodities that saw prices increase in May, as did natural gas and steel. Prices have been moving around since January, Holcomb pointed out, and will likely average out to a modest increase for 2014.

"Prices started the year at 60.5 percent and now they are back to 60," Holcomb said. "That's consistent with what we found during the semiannual report, which calls for a moderate price increase for the year of between 2 percent and 2.5 percent."

Customers are still playing things close to the vest, though, as inventories continue to be soft. Although customer inventories grew from 42 percent to 46.5 percent, there's still room for replenishment, Holcomb said. Customers' inventories have registered at or below 50 percent for 62 consecutive months: a reading below 50 percent indicates customers' inventories are considered too low.

Related stories:

Powered by CR4, the Engineering Community

Discussion – 0 comments

By posting a comment you confirm that you have read and accept our Posting Rules and Terms of Use.
Engineering Newsletter Signup
Get the Engineering360
Stay up to date on:
Features the top stories, latest news, charts, insights and more on the end-to-end electronics value chain.
Weekly Newsletter
Get news, research, and analysis
on the Electronics industry in your
inbox every week - for FREE
Sign up for our FREE eNewsletter


Date Event Location
22-24 May 2018 Los Angeles, CA
04-07 Jun 2018 Boston, MA
06-08 Jun 2018 Los Angeles, CA
18-22 Jun 2018 Honolulu, Hawaii
12-16 Aug 2018 Vancouver, Canada
Find Free Electronics Datasheets