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PMI down in Jan. as manufacturing slowed

Feb 03, 2014 | 05:27 PM |

Tags  Purchasing Managers Index, manufacturing activity, PMI, Institute for Supply Management, new orders, order backlog, pricing, production employment

CHICAGO — Manufacturing activity continued to expand in January but at a less-frenetic pace, according to one key measure, with a number of manufacturers citing the severe winter weather.

The Institute for Supply Management’s purchasing managers index (PMI) landed at 51.3 last month, down 5.2 points from 56.5 in December, following declines in new orders, production and inventories.

Survey respondents cited adverse weather conditions as a factor negatively impacting their businesses in January, while others saw increased activity, according to Bradley Holcomb, chairman of the ISM’s Manufacturing Business Survey Committee.

Of 18 manufacturing industries tracked, both metal manufacturers and fabricators reported growing activity.

"We continue to be busy, working six days, 24 hours a day," one metals producer said in the survey.

However, "poor weather impacted outbound and inbound shipments," one fabricator said.

The new orders index, while down 13.2 points from December, remained in positive territory at 51.2 (an index above 50 indicates growth), as did the production index, which fell 6.9 points to 54.8, but the order backlog index dipped 3.5 points to 48.0.

Prices rose faster in January, with that index up 7.0 points to 60.5. Hot-rolled carbon steel, stainless steel and copper all registered gains.

Metal producers saw new orders rise in January, but they lagged for fabricators. Both sectors saw order backlogs increase, going against the trend. Producers and fabricators ramped up production, however, and both industries continued hiring last month.

"Complicating the January results was abysmal weather after several mild winters," so on balance a lower PMI "is understandable but perhaps a shade worse than it would have been in more normal weather," Michael Montgomery, IHS Global Insight Inc.’s chief U.S. economist, said in a statement. "Somewhere in the middle is still decent growth, but far more sustainable growth without bloating inventories with unsold merchandise."

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