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Manufacturing gains as backlogs rise

Keywords: Tags  Purchasing Managers Index, metal products, Institute for Supply Management, manufacturing economy expands

CHICAGO — Manufacturing activity expanded in December, rebounding from a dip the previous month, as prices, order backlogs and employment rose, according to the latest survey by the Institute for Supply Management.

The December purchasing managers’ index (PMI) rose to 50.7—indicating an overall expansion of the U.S. manufacturing economy—from 49.5 in November, the lowest level since July 2009.

The primary metals industry reported growth in activity last month, while metal fabricators saw a contraction.

"The election is over; unemployment is dropping; new car sales are increasing; consumer confidence is increasing, as are home-sale prices," said one fabricator responding to the survey. "We seem to be turning the corner."

Comments from ISM’s Chicago chapter members were mixed. One supply executive said his company had "more work than we have people to do it" and the "backlog into 2013 is looking strong," but another said that a weak order intake in December had forced layoffs.

The survey’s employment index rose 4.3 points to 52.7 last month, although employment at primary metal producers was flat and metal fabricators reported a decrease in employment.

The prices index rose 3 points to 55.5 in December, with survey respondents saying aluminum pricing rose while most steel product prices fell, except for hot-rolled coil.

The order backlog index jumped to 48.5 last month from 41 in November. Although metal producers saw backlogs rise, fabricators saw their order backlogs decline.

The new orders index remained flat, although primary metal producers said their new orders rose, and both producers and fabricators said their export orders rose.

Metal producers and fabricators reduced their inventories last month; fabricators reported that their customers’ inventories were too high, while producers said their customers’ inventories were too low.

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