MFG.com Blog

What We Learned From the December ISM Report

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The manufacturing industry contracted for a second straight month in December, with the Purchasing Managers' Index falling to 48.2, a 0.4 point decrease from November. 

Across the industry, supply executives and shop owners reported that declines in both global oil prices and nation-wide employment directly contributed to declines in both sales and production. What's more, new orders, a primary indicator of industry growth, contracted for the second straight month, fueling reservations that a return to industry-wide growth could be more protracted than originally anticipated.

[It] is getting harder to forecast in my opinion. Now we have a continuation of the slowdown in China, a new geopolitical situation in the Middle East, and the Federal Reserve taking action in December. None of these things are helping, and that makes it harder to predict. -- Brad Holcomb, chair of the ISM Manufacturing Survey Business Committee 

However, on a micro-level, it was also the second straight month that companies in key industries such as Plastics & Rubber Products cited the automotive sector as a key factor in sustaining business throughout the month.  

For example, MFG.com Marketplace data shows twice the number of domestic-to-domestic RFQs between the automotive and Plastics & Rubber Companies in December, with more than $500,000 worth of awarded value being sourced to domestic suppliers.

From increased imports to decreases in order backlogs and exports throughout December, Plastics & Rubber Products activity hints at the possibility of increased domestic buying in the sector in the early parts of 2016.

As the U.S. trade gap narrows, it looks as if some buyers are fulfilling their commitments to overseas vendors, but opting to source domestically going into the new year -- after those overseas obligations have been fulfilled. 

More and more, we're seeing the bulk of buyers within our marketplace sourcing domestically, with more than 75% of all RFQs posted in the marketplace in December going to domestic suppliers. That's an increase of 10% over November's numbers. So, we know that domestic is big business right now.

But only time will tell if the trend continues well into 2016. 

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