The Industrial Supply Association recently released its November Economic Indicator Report, which showed a poor start to the winter season across the market, and a bleak outlook.
In November, all three ISA indexes – the ISM Purchasing Manager's Index (PMI), and the ISA Distributors and Manufacturers Indexes – all declined from October to November, and sharply for the Distributors and Manufacturers Indexes.
From October to November:
- The PMI dipped from a reading of 50.1 to 48.6
- The ISA Distributors Index dropped from 62.5 to 54.2
- The Manufacturers Index dropped from 66.8 to 54.5
For each index, a reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. All three indexes been above 50 percent since December 2012, with the PMI's streak now snapped.
Comparitively, here's how those indexes read for December of 2015:
- PMI - 55.5
- Distributors - 66.6
- Manufacturers - 61.3
All three indexes have shown a steady decline throughout 2015, although the Manufacturers Index jumped 6.9 points from September to October.
"All three indexes dropped precipitously, indicating a significant slowdown," ISA said in its report. "Thus, while the economy continues to grow, it is doing so at a much slower rate. Conditions in December are not expected to be any better."
ISA's data comprising its indexes are below. Both distributors and manufacturers saw considerable decreases in New Orders, Business Activity, and Sales Revenue. Distributors saw solid gains in Employment, Supplier Deliveries.
Anonymous comments from distributors regarding the indexes were all pessimistic, and included the following:
- "October really hurt. Hard to know if we will see any improvement before 2016."
- "Other than Blanket orders business conditions in December will be lower due to holidays for most of us this will be a 17 day month for sales."
- "We are expecting a very slow December."
Comments from manufacturers included several that were positive, but like distributors, the vast majority were negative. They included:
- "Business in 2nd half of 2015 is down 10 percent from first 6 months. It looks like this will continue. Energy sector and strong dollar and now the “industry talk” will lead us lower."
- "Our core MRO consumable business continues to remain soft, we believe the reduction in the O&G business has greatly impacted this entire category."
- "Based on the 12-month rate of change, our industry sector continues to retract. One month of seeming recovery is followed by a month of disappointment, and so on. I don't expect December's order intake to be any better than a poor November's due to the holidays. Based on what I see today, I am less hopeful than I was several months ago that H1/2016 will provide any meaningful improvement."
- "This was a very poor November for us. The oil sector caused us to go backwards. We are having a good start to December. Hopefully the oil industry will recover sooner rather than later. Drilling will have to start again in the next two years or we will start having shortages and high prices again."