ISA Distributor & Manufacturers Indexes Rebound In May, PMI Rises

The ISA Distributors and Manufacturers indexes rose along with the PMI, a reversal of a month earlier when all three declined.

The Industrial Supply Association posted its May Economic Indicator on Thursday, led by a rise in all three indexes — the ISA Distributors Index, ISA Manufacturers Index and the Institute of Supply Management's (ISM) Producer Manufacturing Index (PMI).

ISA's Distributor Index rose sharply from 57.5 in April to 66.9 in May, the ISA Manufacturers Index had a modest gain from 55.5 to 56.8, and the PMI bumped up from 50.8 to 51.3.

The gains were a reversal from a month earlier, when all three indexes declined from March to April.

For each index, a reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. Thus, May's readings indicate that the industrial economy continues to expand and at a faster rate.

The Distributors Index had its second-highest reading of the past 12 months, a few points below a high of 70.3 in February.

Distributor comments in ISA's Economic Indicator report included contrasting outlooks. Here's a sampling:

  • "All in all this has the makings of a very good year unless some unforeseen event takes place. We don't see any thing at this time."
  • "Super Flat. Market is fragmented. Lots of good things going on, lots of uncertainty still with oil and gas and energy. Mining is down for us. Construction and manufacturing are strong."

Manufacturer comments reflected customer end markets of an industrial economy that looks to remain weakened for the rest of fiscal 2016. Here's a sampling:

  • "Market conditions and new order levels remain sluggish as they have been all year. Steady flow of orders but many customers seem to be reducing inventories to adjust to current demand plus a slowing of large projects all are having a negative impact on sales. We expect the new order level to improve starting mid Q3."
  • "Sales of our traditional products for the month of May actually comped positively compared to May of 2015. This is really due to the fact that last year sales of traditional products were continuing to slide until Q3. It is some good news. We still find this to be a very difficult market to operate in."
  • "Markets in our industry sector remain weak. However, we did experience a slight uptick in Orders for both April and May. I hope I can say “three months in a row”; in my June survey results!"
More in Economy