Manufacturing on the upswing

PMI Solidifies in July Behind Renewed Optimism

Aug. 4, 2020
Growth in new orders and production pushes the index to 54.2%.

With new orders and production on the rise, manufacturing posted its second straight month of growth and its highest reading in more than a year, according to the Institute of Supply Management’s PMI Index for July.

The July PMI was 54.2% in July, up from 52.6% in June and well off the 41.5% mark in April. The index had been below the 50% growth level for seven of the last 12 months, so two straight months of growth for the sector was welcome news.

"In July, manufacturing continued its recovery after the disruption caused by the coronavirus (COVID-19) pandemic,” said Timothy Fiore, chairman of the ISM’s Manufacturing Business Survey Committee. “Panel sentiment was generally optimistic (two positive comments for every one cautious comment), continuing a trend from June. Demand expanded, with the New Orders Index growing at a strong level, supported by the New Export Orders Index re-entering expansion.

“The growth cycle continues for the second straight month after three prior months of COVID-19 disruptions,” Fiore added. “Demand and consumption continued to drive expansion growth, with inputs remaining at parity with supply and demand. Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the best-performing industry sector.”

While not all sectors are showing growth, committee member comments reflected the renewed optimism. Among the comments:

  • “Orders starting to pick up. [An] increase of about 35% to 40%.” (Chemical Products) 
  • “Overall business remains down almost 70%. We are hanging on to as many employees as possible, but we will have to lay off 30% or more for at least two to three months until September or October.” (Transportation Equipment) 
  • “While demand in the coming six months is stabilizing, it is at a significant reduction and clear that customers have little confidence in the forecasts. Export orders to Brazil, South Africa, [and the] Middle East are largely cancelled for balance of 2020.” (Fabricated Metal Products) 
  • “Manufacturing outlook has improved greatly in June, as business has resumed at nearly 100%. We have implemented a number of safeguards that are costing extra money, but we are running.” (Computer & Electronic Products) 
  • “Stabilizing demand for refrigerated and frozen beverage and dessert, but still at higher level than a year ago. Uncertainty of school opening in the fall: How much demand will continue or shift will be dictated by students returning to school or not.” (Food, Beverage & Tobacco Products) 
  • “Uncertainty regarding our industry and business has not improved. We are developing the 2021 budget around multiple scenarios.” (Petroleum & Coal Products) 
  • “Incoming orders are slow. This is usually our busiest time of the year, but production is reduced due to lack of demand. Additional layoffs expected.” (Furniture & Related Products) 
  • “General business climate continues to be subdued, driving highly conservative forecasting due to variability in the ongoing pandemic-driven conditions and economic response.” (Machinery) 
  • “We are still seeing our customers shut down or effected by COVID-19. We are hoping for a bounce-back in September.” (Miscellaneous Manufacturing) 
  • “General business conditions are in a general slowing pattern. Many of the plants are on reduced hours and/or furloughs. About 20% to 25% of plants are scheduled to be consolidated in the next six months to improve margins and profitability.” (Nonmetallic Mineral Products)

Sponsored Recommendations

How BASF turns data into savings

May 7, 2024
BASF continuously monitors the health of 63 substation assets — with Schneider’s Service Bureau and EcoStruxure™ Asset Advisor. ►Learn More: https://www.schn...

Agile design thinking: A key to operation-level digital transformation acceleration

May 7, 2024
Digital transformation, aided by agile design thinking, can reduce obstacles to change. Learn about 3 steps that can guide success.

Can new digital medium voltage circuit breakers help facilities reduce their carbon footprint?

May 7, 2024
Find out how facility managers can easily monitor energy usage to create a sustainable, decarbonized environment using digital MV circuit breakers.

The Digital Thread: End-to-End Data-Driven Manufacturing

May 1, 2024
Creating a Digital Thread by harnessing end-to-end manufacturing data is providing unprecedented opportunities to create efficiencies in the world of manufacturing.

Voice your opinion!

To join the conversation, and become an exclusive member of Machine Design, create an account today!