TEMPE, AZ—The monthly Institute for Supply Management’s (ISM) PMI Index jumped to 60.7 percent in December, marking an eight-month streak of recovery after collapsing in April at the start of the COVID-19 pandemic.
Sharp increases in new orders and production fueled the jump of 3.2 percentage points from the 57.5 percent reading in November. From its low point of 41.5 percent in the April reading, which ended 12 years of economic growth, the PMI has steadily recovered. The big jump was a 9.5 percentage point increase in June from 43.1 percent to 52.5 percent, bringing the index back above the 50 percent threshold for growth and halting three months of decline. The 60.7 percent level in December indicates 20 percent growth over the baseline for manufacturing sector growth.
Manufacturing optimism has since gradually recovered along with the index. “Committee members reported that their companies and suppliers continue to operate in reconfigured factories,” says Timothy R. Fiore, chairman of ISM’s Manufacturing Business Survey Committee. “but absenteeism, short-term shutdowns to sanitize facilities, and difficulties in returning and hiring workers are causing strains that are limiting manufacturing growth potential."
Institute panel optimism is in two keys areas. The New Orders Index hit 67.9 percent, up 2.8 percentage points from the November reading of 65.1 percent, and the Production Index was at 64.8 percent, up 4 percentage points from the November reading. In addition, 16 of the 18 industry markets expanded in December, including the six largest: Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Chemical Products; Petroleum & Coal Products; and Food, Beverage & Tobacco Products.