Economic activity in the manufacturing sector declined in January for the sixth consecutive month while the overall economy declined for the first time in 117 months according to the latest figures from the Manufacturing NAPM Report on Business. The January PMI fell to 41.2%, below the consensus figure of 43.5, and below the breakeven point of 42.7. This is the lowest figure since March 1991 (40.8%) and is at a level that is consistent with a recession.
According to Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Manufacturing Business Survey Committee and vice president, purchasing and strategic alliances, Chesapeake Display and Packaging Company." The manufacturing sector failed to grow in January for the sixth consecutive month. January’s PMI fell below the breakeven point (42.7 percent) for the overall economy for the first time in 117 months. This is the lowest the PMI has registered since March 1991 when it recorded 40.8 percent. Sales continue to be a concern as the New Orders Index has failed to grow since June and the New Export Orders Index fell below 50 percent for the fourth consecutive month. Manufacturing activity has fallen sharply as the Production Index has been markedly weaker in the last two months."
The production indices all fell in January and they all remain below the 40 percent mark. With both New Orders and Backlog of Orders contracting, there seems little hope of improvement in manufacturing activity over the next few months. New Orders failed to grow for the fifth consecutive month and is at its lowest level since January 1991. Backlog of Orders failed to grow for the ninth consecutive month in January. The Production Index fell in January to 37.9 percent down from 43.5 percent in December. This is the second consecutive month, and fourth in the last six months, that the index has been below the 50% mark.
Among other sub-indexes, Prices Paid is the only one registering above 50 percent. The Prices Index is now at 65.7 percent, the third consecutive increase. The Employment Index fell to 43 percent in January, its lowest level since December 1998 after an upward revision of last month's figure. The New Export Orders Index fell to 46.1 percent. This Index has been below 50 percent for four consecutive months. With foreign demand weakening, coupled with the slide in domestic demand, there is little indication of improvement in the manufacturing sector over the near term.
Series January December PMI 41.2 43.7 Production 37.9 42.4 New Orders 37.8 42.0 Backlog of Orders 32.5 36.0 Supplier Deliveries 50.3 52.7 Inventories 42.2 39.8 Employment 43.0 42.8 Prices Paid 65.7 61.0 New Export Orders 46.1 49.9 Imports 48.9 51.2
The next NAPM Report on Business will be released on March 1, 2001.