Manufacturing PMI® Caps 2020 at its Highest Point in a Decade

With the release of the December 2020 Manufacturing ISM® Report On Business® comes extremely positive news to cap off a truly terrible year. Registering a PMI® of 60.7%, manufacturing is firing on all cylinders and charging into 2021 with a full head of steam — all this, after falling to 10-year lows just eight months ago. COVID-19 concerns still linger, but with the prospect of multiple vaccines rolling out, manufacturers are wasting no time in dusting themselves off and embracing a new year with new possibilities ahead.

Every metric — barring import/export — increased from November to December 2020, signaling an ongoing recovery as opposed to a V-shaped one that may not be sustainable (or healthy). Overall, PMI ticked up 3.2 points to its highest point in a decade on the heels of gains in New Orders (2.8%), Production (4%), and Employment (3.1%).

The largest jump in this month’s report comes from prices, which leaped an astounding 12.2 points. While it signals a healthy market of demand, it’s one metric to keep an eye on as we head into what could be a shifting economic climate in 2021. However, coupled with a rising supplier delivery metric (up 5.9%), it’s clear that there’s plenty of demand in the current climate. Import and export numbers declined fractionally, but remain relatively flat in expansion territory.

Signs of a healthy economic recovery

When the PMI plunged rapidly in April and shot up significantly at the start of the fourth quarter, many manufacturers expressed concern for a rebound that was too sharp and too sudden. Although V-shaped recoveries after economic hardship aren’t unheard of, they’re also not entirely sustainable. The incremental growth shown in this latest report shows a tapering of growth, while still moving the needle up and to the right.

We’ve followed the four-month swing from a PMI of 50.9 down to 41.5 (January to April) with a 20-point increase over an eight-month span, showing clear indications of sustainability headed into the new year. What’s more, this growth has been rapid and sustained, giving manufacturing executives optimism headed into a 2021 that is rooted in vaccine rollouts, political administration changes, and an abundance of reshoring initiatives.

COVID-19 isn’t over yet

Despite the positive numbers and general sentiment expressed by the recovery of the manufacturing industry, COVID-19 concerns still linger. There’s still the challenge of distribution of the three approved vaccines to a broad population — as well as concerns about new developing strains of the coronavirus. Manufacturers are tempering their optimism and continuing to put up safeguards, just in case.

“COVID-19 outbreaks are causing supply chain issues for Tier-1 and Tier-2 suppliers. More work needs to ensure suppliers keep us in the loop with any problem in their supply chain. But end-customer demand for products is keeping production and future outlook positive.” (Transportation Equipment)

“Sales are now exceeding pre-COVID-19 levels, but uncertainty remains through the winter months while COVID-19 is still rampant.” (Miscellaneous Manufacturing)

There are still mysteries ahead for 2021, but with the end of the pandemic (hopefully) in sight, manufacturers are preparing themselves for the last leg in overcoming the rampant disruption caused by the global pandemic. Now, it’s all eyes ahead on how domestic manufacturing can restructure and restore itself and salvage the remainder of the decade ahead.

Manufacturing continues its growth, which means producers should continue planning for a future of growth. That starts finding long-term, reliable partners for repair and maintenance. You can always count on the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
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