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Manufacturing in recovery, paper prices up

Feb 1, 2010 12:00 AM

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Economic activity in the manufacturing sector expanded in January for the sixth consecutive month, and the overall economy grew for the ninth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business. The Purchasing Managers Index (PMI) rose to 58.4 percent, its highest reading since August 2004 when it registered 58.5 percent.

"This month's report provides significant assurance that the manufacturing sector is in recovery," says Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. "Both the New Orders and Production Indexes are above 60 percent, indicating strong current and future performance for manufacturing. This month, 13 of 18 industries reported growth, up from nine industries last month, and this is a good indication that the impact of the recovery is expanding."

"Commodity prices are moving up again," said a respondent from the Printing & Related Support Activities industry. Both the printing and paper industries reported paying higher prices.

Ore adds, "The past relationship between the PMI and the overall economy indicates that the PMI for January (58.4 percent) corresponds to a 5.5 percent increase in real gross domestic product (GDP) on an annual basis."

Manufacturers' inventories contracted at a slower rate in January as the Inventories Index registered 46.5 percent. Printing & Related Support Activities was among the nine industries reporting inventory decreases in January, as well as those reporting lower customers' inventories. Printing also reported decreases in order backlogs.

Average commitment lead time for Capital Expenditures increased 8 days to 118 days. Average lead time for Production Materials increased 2 days to 53 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies was unchanged at 21 days.

The Manufacturing ISM Report On Business, published monthly by the Institute for Supply Management, is based on data compiled from purchasing and supply executives nationwide. Survey responses reflect the change, if any, in the current month compared to the previous month.