February 2015 Economic Indicators

Melanie Garza - Director of Strategy & Growth

Manufacturing Sector Continues to Grow, But at a Slower Pace

The Institute for Supply Management reports that economic activity in the manufacturing sector expanded for the 20th consecutive month, in January. The January PMI® was 53.5%, but was 1.6% slower than December. New Orders fell 4.9% from December to January at 52.9%. The Production Index remained strong at 56.5% down slightly from December’s reading of 57.7%. Inventories of raw materials are climbing up 5.5% from December to 51%.

Economists report that most industries, but not all, are experiencing strong demand, as 2015 kicks off. Of the 18 manufacturing industries, 14 are reporting growth in January, in the following order: Primary Metals; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; Chemical Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Furniture & Related Products. The two industries reporting contraction in January are: Textile Mills; and Nonmetallic Mineral Products.

Industrial Capacity Utilization Climbs

Capacity Utilization in the manufacturing sector grew 2.3%, in 2014 over the previous year. The December reading for the manufacturing sector came in at 78.4% to close the year out. The average manufacturing capacity utilization rate from 1972-2013 is 78.7%, with a high of 85.6% in 1988, and low of 63.9% in 2009.

A capacity utilization reading of more than 80% indicates capital spending is more likely for property, plant and equipment. The overall index for durable goods was 78.3%, and selected industries are listed as follows: primary metals 81.3%; fabricated metals 80.8%; machinery 83.9%; electronics 84%; and automotive 83.3%. Aerospace remains at 77.8% and computers are registering a low of 71.7% utilization.

The nondurable goods index is 80.3% with chemicals at 78.5% and plastics and rubber at 79.4%.

Questions or comments? Please contact Melanie Garza at mgarza@teamCOACT.com.