Key numbers and economic indicators for 2012
2011 was the second year of recovery for most manufacturers, suppliers and distributors serving the 5 billion pound U.S. composites industry. Having reached a volume of approximately 5.1 billion pounds in 2006, U.S. demand tumbled by an unprecedented 42 percent, or 2.1 billion pounds, over a 3-year period (2007- 2009), with the steepest decline in 2009. However, a strong rebound in 2010 enabled the industry to recover 1.2 billion pounds. The estimated full-year shipments in 2011 restored another 350 million pounds of demand and positioned the industry at 4.6 billion pounds or 89 percent of the previous peak year. Staying alive and profitable in a Vshaped business cycle as severe as our most recent one has been challenging for most companies in the industry and the survivors can take a well-deserved deep breath as indicators suggest the worst is behind them. Looking ahead, the key economic indicators suggest 2012 will bring more tempered industry growth in the single digit range.
Purchasing Managers’ Index of Manufacturing
A popular indicator, the Purchasing Managers’ Index of Manufacturing is a data series published by the Institute for Supply Management (ISM). Every month since 1931 it has published this report based on a survey of 400 industrial companies. Any reading above 50 percent indicates the manufacturing economy is growing and any score above 42.5 percent indicates an expansion of the overall economy in terms of gross domestic product (GDP).
- For the month of November 2011, the index was 52.7 percent, the 28th consecutive month the index indicated expansion by U.S. Manufacturing and the 30th consecutive month it marked growth in U.S. GDP. The PMI for manufacturing turned negative in February 2008 and did not return to positive territory until 19 months later in August 2009. After the 28 months of positive growth the PMI peaked at 61.4 percent in February. Since then it slipped to the low 50s but moved up nearly two percentage points from October to November of 2011.
- The PMI is considered a strong and reliable indicator because it captures 10 separate measures in its monthly survey: new orders, backlog of orders, new export orders, imports, production, supplier deliveries, inventories, customer inventories, employment and prices, each of which is scored and reported each month. The strongest factors last month and their respective scores were new orders (57 percent), production (57 percent) and exports (52 percent), a healthy combination of elements. The new orders index jumped 4.3 percent—an encouraging sign because it should convert into higher production and a stronger overall PMI in future months.
- 8 of the 18 manufacturing industries in the survey reported growth in November and the Plastics & Rubber Products segment reported business conditions were contracting.