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Manufacturing’s Up While Electronics Stays Moderate

The US manufacturing sector continued on a 19-month expansion roll in February, according to the latest Institute for Supply Management (ISM) Report On Business. Most notably, the ISM's Employment Index is above 60 percent for only the third time in the last decade.

“While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the prices index indicates significant inflation of raw material costs across many commodities,” said Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee, in a press release.

Segments related to the electronics industry are doing fairly well: Of the 18 manufacturing industries tracked by ISM, 14 are reporting growth in February. Electrical Equipment, Appliances & Components ranked fourth in the ISM's index, and Computer & Electronic Products ranked eighth.

Overall, data from sources such as ISM's Purchasing Managers Index (PMI) indicates consistent growth. The PMI registered 61.4 percent, an increase of 0.6 percentage points when compared to January's reading of 60.8 percent. (A PMI in excess of 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) This is also the highest PMI reading since May 2004 when the index also registered 61.4 percent.

Of specific concern to the electronics industry is ISM's tracking of commodity availability and prices. There were no reductions in commodity prices in February, and the commodities reported in short supply for two consecutive months were capacitors, cocoa powder, and electric components.

ISM's Employment Index registered 64.5 percent in February, which is 2.8 percentage points higher than the 61.7 percent reported in January. This is the 17th consecutive month of growth in manufacturing employment. (An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics data on manufacturing employment.) Of the 18 manufacturing industries tracked by ISM, 14 reported growth in employment in February. Computer & Electronic Products ranked fifth, while Electrical Equipment, Appliances & Components ranked seventh.

I'd recommend reading the entire report at ISM. There are no big surprises — electronics overall is doing better globally than in the US. The growth indications are good, but scarcity of components could hold the industry back if the situation persists. As always, feedback is welcome at or, better, on the message board below.

2 comments on “Manufacturing’s Up While Electronics Stays Moderate

  1. Mydesign
    March 3, 2011

       Barbara, you are right. After the recession period almost all sector are picking up gradually, especially the technology based companies.  During the recession time the key technological (IT and Electronics) companies suffered a lot and some of them even lost their identity too. After all, from the midst of last year, market starts showing a positive sign of growth and companies are driving to capture the markets in their own traditional way. Now the recovery sign is more evident (As per ISM survey for last 18 months) and by keeping the upcoming demand in the industry, everybody is running fast to grab their own positions.

        As you stated, demand is more and facing with scarcity of components, that’s right. During the recession period due to the lack of demand, component manufacturing companies had faced lots of problem due to the non movement of components, which made a large burden on them. So in order to avoid such situations in future they are very careful and targeting a level below than the demand (playing in a safer level). I strongly agree that, only if demands can cater requirements, then the supply chain can run in a smoother way.

  2. mfbertozzi
    March 3, 2011

    Toms, Barbara, your posts is giving me the chance for linking it to real events in progress: recent crisis in Northen Africa have ramped a lot electronics demands especially as tools to support people there and broadcast news live.

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