The manufacturing sector will go into 2007 on somewhat more solid footing, with production and new orders rebounding noticeably in December in one key part of the country.
The National Association of Purchasing Management – Chicago unveiled its widely watched Business Barometer Thursday, known as the PMI, with the index rising to 52.4 from 49.9 in November.
A key reading for the industry – new orders – surged to 57.8 from 52 a month ago, and the production index increased to 56.2 from 54.4.
The pace of decline in order backlogs stabilized and prices paid were unchanged, but contraction within employment continued.
Despite the uptick in the overall index and in new orders and production, the Chicago NAPM saw little cause for optimism.
“The bottom line for the December report is economic growth as 2006 ends and 2007 begins is, and likely will be, slower than average,” the group said.
Among the comments from those surveyed:
- “Some slowing in new orders trend is evident. Long lead times and rising prices are still an issue in selected commodities.”
- “The federal government has not passed a budget for this fiscal year 2007. They are on a continuing resolution. Hence, spending by the federal government for non-defense work will likely be slower as compared to last year.”
- “Business is robust, falling raw materials prices are helping.”
The monthly PMI survey is derived from purchasing managers in northern Illinois and parts of Indiana. It is seen as a precursor for the national report on manufacturing from the Institute for Supply Management.
The ISM report will be released on Tuesday, Jan. 2.