Manufacturing Index Is On Cusp Of Expansion

By John S. McClenahen At 49.9%, the Institute for Supply Management's (ISM) latest manufacturing index shows that sector of the U.S. economy was still contracting in January. However, "it is encouraging that the rate of decline has slowed to its lowest measurable level," states Norbert J. Ore, group director for strategic sourcing and procurement at Georgia-Pacific Corp. and the chair of ISM's manufacturing business survey committee. January's reading was 1.8 percentage points higher than December 2001's 48.1% mark on the closely watched index. A reading below 50% indicates U.S. manufacturing activity is contracting; above 50% signals that manufacturing generally is expanding. Notably in January, among the 10 components of ISM's manufacturing index, new orders, production, and supplier deliveries were all above the 50% level. Employment and inventories continued to constrain the index, nevertheless. "Comments from purchasing and supply executives . . . reflect many concerns with regard to continuing softness in their industry," ISM relates. "However, there is a sense that orders are beginning to build and that manufacturers are starting to plan for increased business in the months ahead." ISM was formerly known as the National Association of Purchasing Management.

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