June services economy remained at similar levels compared to May, with some variation, according to the most recent edition of the of the Services ISM Report on Business, which was issued today by the Institute for Supply Management (ISM).
The Services PMI came in at 55.3 (a studying of 50 or higher signals growth), down 0.6% compared to May, following a 1.2% decrease, from April to May. The Services PMI showed growth, at a slower rate, for the 25th consecutive month, with services sector growth now remaining intact for 147 of the last 149 months through June, said ISM.
The June Services PMI is 5.5% below the 12-month average of 60.8, with November 2021’s 68.4 and June’s 55.3 marking the high and low readings over that period, respectively. What’s more, the June studying represents the lowest one since February 2021, which came in at 55.9.
ISM reported that 14 of the services sectors it tracks saw gains in June, including: Mining; Management of Companies & Support Services; Other Services; Construction; Arts, Entertainment & Recreation; Utilities; Public Administration; Wholesale Trade; Health Care & Social Assistance; Professional, Scientific & Technical Services; Transportation & Warehousing; Accommodation & Food Services; Retail Trade; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Information; Real Estate, Rental & Leasing; and Educational Services. ISM noted that no service sectors saw declines in June.
The report’s equally weighted subindexes that directly factor into the NMI were mixed in June, including:
- Business activity/production, at 56.1, rose 1.6%, growing, at a faster rate, for the 25th consecutive month, with 15 services sectors reporting growth;
- New orders, at 55.6, fell 2.0%, growing, at a slower rate, for the 25th consecutive month, with 13 services sectors reporting growth;
- Employment, at 47.4, fell 2.8%, falling back into contraction territory, after a 0.7% May gain, contracting in April a 5.5% March gain, which was preceded by seven straight months of growth, with seven services sectors reporting growth; and
- Supplier deliveries, at 61.9 (a studying above 50 percent indicates slower deliveries), up 0.6 over May and slowing, at a faster rate, for the 37th consecutive month
Comments from ISM member respondents included in the report highlighted various issues being seen in the services sector, including: supply chain, employment, and inflation, among others.
“Supply chain and provider reliability continues to Improve for most of our key food and packaging needs,” said an Accommodation & Food Services respondent. “Equipment still (experiencing) typical long delays. Staffing employment challenges have resurfaced, and costs have dramatically increased on core needs, led by soybean oil products. Rise in diesel fuel affecting almost everything.”
A Utilities respondent said that despite higher inflation and energy costs, demand and business activity continue to be at record highs, with little sign of a slowdown.
Tony Nieves, Chair of ISM’s Management Services Business Survey Committee, explained in an interview that declines in the Services PMI, from March through June, serve as a barometer of how much pent-up demand there was from consumers, for services economy activities, out of 2021 and the first half of 2022.
“Things were continually opening up over that period,” he said. “The thing we are experiencing right now is that we are getting a little bit of a decline in consumer confidence, with inflation, issues we are having with materials shortages, some pullback in real estate and rental prices coming down a little bit. Hopefully, fuel prices will come down more, too. But because of the inflation eating into consumer spending…people are spending money on other things. It is not necessarily tangible goods like it was in the past, but more so they are dining out still and spending money on experiences. It is not all gloom and doom.”
While talk of an impending economic recession remains, Nieves said that the contraction of the GDP, down 1.2% for the second quarter, indicates that while the economy may already be in a technical recession, there has never been a recession in which the unemployment rate has been as low as it currently is.
With the ISM report’s employment studying currently on an uneven path, Nieves said that the key cannot hire.
“There have been some layoffs in the tech space and some other areas, but, for the most part, the majority of [ISM member] respondents have been telling us they cannot find people and there is a restricted labor pool, or else that employment number would be in positive territory,” he said. “Many industries simply cannot get the people they need. Companies are hiring people that are not of the quality or caliber of the people they want. That was a finding in our Semiannual Forecast.”
Looking at the impact of prices on the services sector, Nieves said he expects that number to come down in the coming months, for various reasons.
“One reason is that materials prices are coming down, for certain metals, as is fuel somewhat,” he said. “The pricing power will not be there, because consumer pricing is going down. I think all these factors will take that pricing down. Where that goes to, I have no idea, but I think we have pretty much peaked on this inflation piece. This was all demand-pull inflation to start with, so when demand is going away, or still there, there are certain areas, where it is not as significant as it was in the past.”
In assessing the services economy on a year-to-date basis, Nieves said 2023 started out very strong, with some leveling-off now occurring, in the form of more incremental growth, which he expects to continue over the balance of the year. As for 2023’s prospects, he said it is still too early to tell.
“If we can weather some of the potential headwinds for the balance of the year and, hopefully, we have a good holiday season, it can maybe carry over into a good 2023,” he said. “A lot of that has to do with not just whether or not we avoid a recession, or even if we do go into a recession, that it is a mild one and that we don’t have any more geopolitical ramifications like the Russia-Ukraine war. It has caused more disruptions in Europe than here, but it is still a disruption.”
July 12, 2022Thursday, June 23, 2022
A business can’t run smoothly without a consistent process, proper legal project management, and work allocation among staff. In law firms, tasks can originate from many sources — clients, partners, or firm management. How these tasks are distributed typically depends on specialization, skill, and time sensitivity. Unfortunately, what’s not mentioned in this list is bandwidth. Accounting for staff workloads can be difficult in situations where there are too many time-sensitive tasks or limited staff. If your staff is overloaded with tasks the likelihood of items falling through the cracks increases as well as burnout. Both of which lead to a decrease in productivity and disruption of business.
To limit risking business continuity or your staff’s mental health, it’s essential for law firms to create streamlined, consistent systems to distribute workloads and keep all employees on the same page.
Here are 3 tips for better legal project management and work allocation of law firm staff:
1. Plan and Strategize
Effective work allocation requires thorough planning and strategizing with real-time visibility into the staff’s schedules and workloads. This is especially true of large firms with a lot of staff members. If partners or management aren’t aware of how much each associate or staff member is balancing, they may unintentionally overload them.
Ideally, there should be a centralized task management system that management uses to plan and assign work to associates and other staff members. This system should be updated daily and would provide current information on everyone’s current responsibilities. This ensures that management and partners can monitor their workloads and avoid piling everything onto just a few people.
With this information at their fingertips, partners and management can make strategic decisions to ensure that the appropriate work is allocated to the appropriate staff.
2. Divide Work Evenly
Overloading some associates and leaving others underutilized can quickly lead to issues of burnout, poor work-life balance, and job dissatisfaction. At a time when firms are struggling to attract and keep talent, proper work allocation is paramount.
Legal practice management software can help partners and firm management to evenly distribute work. LPMs provide a comprehensive view of the staff and their time, schedule, and skill sets, giving partners and management all the information they need to develop all the staff’s competencies and keep the workload more balanced. Workloads should be balanced across departments as well. Work allocation requires planning, especially so in larger firms with multiple departments or offices. This is all the more reason to make work allocation a strategic and streamlined process.
Processes for work allocation can be standardized and systemized across the firm, offices, and practice groups. Law firms can set this up on their own with task and time management solutions, but if necessary, a larger firm can hire support staff to handle work allocation and develop systems to assign work to the appropriate parties.
For example, a work allocation manager can manage workflows and monitor skills and availability across all practice areas, departments, and locations to ensure the entire machine is running smoothly.
3. Track Development Needs
It’s tempting to hand off high-priority tasks to the most capable and experienced associates or staff members, but that doesn’t serve the firm’s long-term needs. If the same staff members keep learning, growing, and succeeding, it leaves skill and experience gaps in others.
Law firms should have a comprehensive view of the qualifications, skills, and proficiencies each associate has, areas of growth, and the skills they’d like to develop in the future. This provides a more democratic method of assigning tasks while keeping the whole team learning and growing together. A law practice management software that has custom reporting functions can help keep track of user activity or where tasks have been historically allocated to simplify this process.
If significant skills gaps are discovered, law firms need to take a proactive approach to correct them. All associates and staff members should have management training, business development training, client training, and communication training. Associates should have ongoing development in areas related to their practice or the firm’s goals. Partners and managers should be available for support and ongoing mentorship to help associates stay on track to reaching their goals.
The Importance of Legal Project Management
Legal project management and work allocation across teams can be a unique, ongoing challenge. However, with the right systems and processes in place, your firm can ensure that work is dispersed evenly and fairly. When done strategically, not only will this help move work forward and support productivity, but it will Improve the overall satisfaction of your staff at the workplace. Above all, the livelihood and health of your staff is the true marker of a successful business.
©2006-2022, BILL4TIME. ALL RIGHTS RESERVED.National Law Review, Volume XII, Number 174
A business index based on the feedback of executives in the services industries, including construction, shows a decline in the overall index, but continued overall economic growth.
The Institute for Supply Management (ISM) issued its Services ISM Report on Business for June, which came in at 55.3%, is 0.6% lower than May. Economic activity grew for the 25th month in a row, however, according to Anthony Nieves, chair of the (ISM) Services Business Survey Committee. The ISM Services PMI index is a set of economic indicators based off surveys of private-sector companies in the services sector, which includes construction. Construction was the fourth fastest growing sector in the services industry report.
“According to the Services PMI, all 18 industries reported growth,” Nieves said. “The composite index indicated growth for the 25th consecutive month after a two-month contraction in April and May 2020. Growth continues, albeit slower, for the services sector, which has expanded for all but two of the last 149 months. The slight slowdown in services sector growth was due to a decline in new orders and employment. The Employment Index (47.4%) contracted, and the Backlog of Orders Index grew 8.5 percentage points, to 60.5%. Logistical challenges, a restricted labor pool, material shortages, inflation, the coronavirus pandemic and the war in Ukraine continue to negatively impact the services sector.”
The Business Activity Index registered 56.1%, an increase of 1.6 percentage points compared to the studying of 54.5% in May. The New Orders Index figure of 55.6% is 2 percentage points lower than the May studying of 57.6%.
“(Interest) rate increases have slowed sales but have not helped with supply challenges yet," one construction executive reported.
The provider Deliveries Index registered 61.9%, 0.6 percentage point higher than the 61.3% reported in May. provider Deliveries is the only ISM Report On Business index that is inversed; a studying of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases. The Prices Index dropped for the second consecutive month in June, decreasing 2 percentage points to 80.1%.
Services businesses continue to struggle to replenish inventories, as the Inventories Index contracted for the first time since January 2022; the studying of 47.5% is down 3.5 percentage points from May’s figure of 51%.
“The Inventory Sentiment Index (46.2%, up 1.7 percentage points from May’s studying of 44.5%) contracted in June for the fourth consecutive month, indicating that inventories are in ‘too low’ territory and insufficient for current business requirements,” he said.
Commodities Pricing
The following commodities are up in price for the month (the number of consecutive months the commodity is listed is indicated after each item): aluminum products (7), chemicals (3), chicken (10), construction materials (2), diesel fuel (19), electrical components (17), electronic components (7), food and beverages (3), food products (4), fuel (18), fuel-related products (4), gasoline (19), hotel rates (2), janitorial supplies, lab supplies, labor (19), labor — temporary (5), logistics services, paint, plastic products (11), resin (2), steel products (18), transformers, travel (2) and wire cable.
Commodities lower in price include: cleaning supplies, lumber, oriented strand board (OSB) and polyvinyl chloride (PVC) products.
Commodities in short supply include: appliances (4), baby formula (2), contrast media (2), diesel fuel (2), electrical components (3), electronic components (7), garage doors, lab supplies, labor (11), microchips (2), needles and syringes (6), paper products (4), sugar and transformers (2).
June Services PMI
The 12-month Services PMI average is 60.8%, reflecting consistent growth in the services sector, which has expanded for 25 consecutive months. The June reading, at 55.3%, however, set a 12-month low for a second consecutive month and is the lowest since May 2020, when the index registered 45.2%. A studying above 50% indicates the services sector economy is generally expanding; below 50% indicates the services sector is generally contracting.
“The past relationship between the Services PMI and the overall economy indicates that the Services PMI for June (55.3%) corresponds to a 1.9% increase in real gross domestic product (GDP) on an annualized basis,” Nieves said.
Business Activity
Construction was one of the top performing sectors in the Services report.
ISM’s Business Activity Index registered 56.1% in June, an increase of 1.6 percentage points from the studying of 54.5% in May, indicating growth for the 25th consecutive month. Comments from respondents include: “Higher customer demand and more capacity online” and “Business is higher but slower than expected due to summer holidays, customers and employees are on vacation.”
The 15 industries reporting an increase in business activity for the month of June, listed in order, are: management of companies and support services, construction, other services, accommodation and food services, arts, entertainment and recreation, mining, professional, scientific and technical services, utilities, finance and insurance, wholesale trade, educational services, health care and social assistance, information, transportation and warehousing and public administration.
Pricing
Pricing increased once again for businesses. According to the report, prices paid by services organizations for materials and services increased in June for the 61st consecutive month, with the index registering 80.1%, 2 percentage points lower than the 82.1% that was recorded in May.
All services industries reported an increase in prices paid during the month of June, in the following order: arts, entertainment and recreation, mining, transportation and warehousing, public administration, retail trade, accommodation and food services, educational services, wholesale trade, information, professional, scientific and technical services, real estate, rental and leasing, finance and insurance, construction, utilities, health care and social assistance, management of companies and support services, other services, and agriculture, forestry, fishing and hunting.
Employment
Construction employment was up for June, which isn't a surprise given the season. Overall, labor numbers decreased last month.
According to the report, employment activity in the services sector contracted in June for the third time in the last five months. ISM’s Employment Index registered 47.4%, down 2.8 percentage points from the studying of 50.2% registered in May. Comments from respondents include, “Unable to fill positions with qualified applicants” and “Extremely hard to find truck drivers.” Also, “Demand for talent is higher, but availability of candidates to fill open roles continues to keep employment levels from increasing.”
The seven industries reporting an increase in employment in June, listed in order, are: mining, construction, wholesale trade, other services, professional, scientific and technical services, public administration, and health care and social assistance. the five industries reporting a decrease in employment in june are: real estate, rental and leasing, agriculture, forestry, fishing and hunting, accommodation and food services, finance and insurance, and educational services. Six industries reported no change in June.
TEMPE, Ariz. — July 1, 2022 — Economic activity in the manufacturing sector grew in June, with the overall economy achieving a 25th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:
“The June Manufacturing PMI® registered 53 percent, down 3.1 percentage points from the studying of 56.1 percent in May. This figure indicates expansion in the overall economy for the 25th month in a row after a contraction in April and May 2020. This is the lowest Manufacturing PMI® studying since June 2020, when it registered 52.4 percent. The New Orders Index studying of 49.2 percent is 5.9 percentage points lower than the 55.1 percent recorded in May. The Production Index studying of 54.9 percent is a 0.7-percentage point increase compared to May’s figure of 54.2 percent. The Prices Index registered 78.5 percent, down 3.7 percentage points compared to the May figure of 82.2 percent. The Backlog of Orders Index registered 53.2 percent, 5.5 percentage points below the May studying of 58.7 percent. The Employment Index contracted for a second straight month at 47.3 percent, 2.3 percentage points lower than the 49.6 percent recorded in May. The provider Deliveries Index studying of 57.3 percent is 8.4 percentage points lower than the May figure of 65.7 percent. The Inventories Index registered 56 percent, 0.1 percentage point higher than the May studying of 55.9 percent. The New Export Orders Index studying of 50.7 percent is down 2.2 percentage points compared to May’s figure of 52.9 percent. The Imports Index climbed into expansion territory, up 2 percentage points to 50.7 percent from 48.7 percent in May.”
Fiore continues, “The U.S. manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints. Despite the Employment Index contracting in May and June, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, according to Business Survey Committee respondents’ comments. Panelists reported lower rates of quits compared to May. Prices expansion slightly eased for a third straight month in June, but instability in global energy markets continues. Sentiment remained optimistic regarding demand, with three positive growth comments for every cautious comment. Panelists continue to note supply chain and pricing issues as their biggest concerns. Demand dropped, with the (1) New Orders Index contracting, (2) Customers’ Inventories Index remaining at a very low level, though it increased and (3) Backlog of Orders Index decreasing but still in growth territory. Consumption (measured by the Production and Employment indexes) was mixed during the period, with a combined minus-1.6-percentage point change to the Manufacturing PMI® calculation. The Employment Index contracted for the second month in a row after expanding for eight straight months (September through April), but panelists again indicated month-over-month improvement in ability to hire in June. Challenges with turnover (quits and retirements) and resulting backfilling continue to plague efforts to adequately staff organizations, but to a lesser degree compared to the previous month. Inputs — expressed as provider deliveries, inventories and imports — continued to constrain production expansion but to a lesser extent compared to May. The provider Deliveries Index indicated deliveries slowed at a slower rate in June, which was supported by a slight increase in the Inventories Index. The Imports Index expanded in June after one month of contraction preceded by six consecutive months of expansion. The Prices Index increased for the 25th consecutive month, at a slower rate compared to May.
“All of the six biggest manufacturing industries — Computer & Electronic Products; Machinery; Transportation Equipment; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products — registered moderate-to-strong growth in June.
“Manufacturing performed well for the 25th straight month. There are signs of new order rate softening — cited in 17 percent of general comments, compared to 10 percent in May — but the root cause is difficult to determine: (1) demand reduction, (2) adjustment for excessive lead times, causing order rate adjustments or (3) a combination of both. Employment activity remain strongly positive in spite of the uncertainty with new order rates,” says Fiore.
Fifteen manufacturing industries reported growth in June, in the following order: Apparel, Leather & Allied Products; Textile Mills; Printing & Related Support Activities; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products. The three industries reporting contraction in June compared to May are: Paper Products; Wood Products; and Furniture & Related Products.
What Respondents Are Saying
“Backlog is high, but incoming orders slowing this month.” [Computer & Electronic Products]
“New orders have stabilized and not increased.” [Chemical Products]
“Continued strong demand for transportation equipment.” [Transportation Equipment]
“Business is slower than expected in volume, but revenue is on pace with our budget. Ocean freight costs are finally beginning to fall a bit. We are already receiving large orders for the fall, which is encouraging.” [Food, Beverage & Tobacco Products]
“Continued tightening of market, rising gas/diesel prices, and limited labor/drivers equates to increased cost. Few markets showing a levelling off.” [Petroleum & Coal Products]
“Our suppliers are experiencing a softening of orders. We are still running at the same high level we did throughout 2021 and in early 2022.” [Machinery]
“Business is still steady. Some customers are pushing orders out because they have too much inventory. We are able to backfill the pushed orders from customers that want theirs earlier, so we aren’t losing capacity.” [Fabricated Metal Products]
“We are hearing from customers that their inventories are high, and sales are coming down. We expect orders to decline on the coming months until inventories are leveled properly against demand.” [Apparel, Leather & Allied Products]
“Orders and production continue to be strong, but material availability is holding us back. Cannot run enough hours to eat into the backlog.” [Electrical Equipment, Appliances & Components]
“Supply seems to be settling to some degree, but what it is settling into remains in question. Diminishing cost and (continued) limited supply in aluminum make for an interesting combination. There are actually more questions than answers this month.” [Primary Metals]
| MANUFACTURING AT A GLANCE June 2022 | ||||||
| Index | Series IndexJun | Series IndexMay | Percentage
Point Change |
Direction | Rate of Change | Trend* (Months) |
| Manufacturing PMI® | 53.0 | 56.1 | -3.1 | Growing | Slower | 25 |
| New Orders | 49.2 | 55.1 | -5.9 | Contracting | From Growing | 1 |
| Production | 54.9 | 54.2 | +0.7 | Growing | Faster | 25 |
| Employment | 47.3 | 49.6 | -2.3 | Contracting | Faster | 2 |
| Supplier Deliveries | 57.3 | 65.7 | -8.4 | Slowing | Slower | 76 |
| Inventories | 56.0 | 55.9 | +0.1 | Growing | Faster | 11 |
| Customers’ Inventories | 35.2 | 32.7 | +2.5 | Too Low | Slower | 69 |
| Prices | 78.5 | 82.2 | -3.7 | Increasing | Slower | 25 |
| Backlog of Orders | 53.2 | 58.7 | -5.5 | Growing | Slower | 24 |
| New Export Orders | 50.7 | 52.9 | -2.2 | Growing | Slower | 24 |
| Imports | 50.7 | 48.7 | +2.0 | Growing | From Contracting | 1 |
| OVERALL ECONOMY | Growing | Slower | 25 | |||
| Manufacturing Sector | Growing | Slower | 25 | |||
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.
Commodities Reported Up/Down In Price And In Short Supply
Commodities Up in Price
Adhesives and Paint (7); Aluminum* (25); Caustic Soda (4); Corrugate (5); Corrugated Packaging (20); Crude Oil (2); Diesel Fuel (18); Electrical Components (19); Electricity; Electronic Components (19); Energy (4); Freight (20); High-Density Polyethylene (HDPE) Resin; Labor — Temporary (14); Lumber* (7); Natural Gas (12); Packaging Supplies (19); Paper (4); Petroleum Based Products (2); Pigments and Dyes; Resin Based Products (3); Plastic Resins* (6); Rubber Based Products (11); Steel* (23); Steel — Fabricated & Machined Components (2); Steel — Stainless (20); Steel Castings; Steel Products (22); and Synthetic Rubber.
Commodities Down in Price
Aluminum* (2); Lumber*; Ocean Freight; Plastic Resins*; Steel* (2); Steel — Cold Rolled; Steel — Hot Rolled (2); and Steel — Scrap (2).
Commodities in Short Supply
Electric Motors; Electrical Components (21); Electronic Components (19); Hydraulic Components (2); Labor — Temporary (14); Packaging Products (2); Paper (3); Plastic Resins (2); Rubber Based Products; Semiconductors (19); Steel — Fabricated & Machined Components (2); Steel — Stainless; and Steel Products (3).
Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.
June 2022 Manufacturing Index Summaries
Manufacturing PMI®
Manufacturing grew in June, as the Manufacturing PMI® registered 53 percent, 3.1 percentage points lower than the May studying of 56.1 percent. “The Manufacturing PMI® continued to indicate sector expansion and U.S. economic growth in June. Three of the five subindexes that directly factor into the Manufacturing PMI® were in growth territory. All of the six biggest manufacturing industries registered moderate-to-strong growth in June, in this order: Computer & Electronic Products; Machinery; Transportation Equipment; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products. The Production Index increased at a slightly faster rate. The provider Deliveries Index slowed at a slower rate while the Inventories Index increased slightly, indicating somewhat easing supply chain congestion. Eight of the 10 subindexes were positive for the period; a studying of ‘too low’ for the Customers’ Inventories Index is considered a positive for future production,” says Fiore. A studying above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A Manufacturing PMI® above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June Manufacturing PMI® indicates the overall economy grew in June for the 25th consecutive month following contraction in April and May 2020. “The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for June (53 percent) corresponds to a 1.5-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.
The Last 12 Months
| Month | Manufacturing PMI® | Month | Manufacturing PMI® | |
| Jun 2022 | 53.0 | Dec 2021 | 58.8 | |
| May 2022 | 56.1 | Nov 2021 | 60.6 | |
| Apr 2022 | 55.4 | Oct 2021 | 60.8 | |
| Mar 2022 | 57.1 | Sep 2021 | 60.5 | |
| Feb 2022 | 58.6 | Aug 2021 | 59.7 | |
| Jan 2022 | 57.6 | Jul 2021 | 59.9 | |
| Average for 12 months – 58.2
High – 60.8 Low – 53.0 |
||||
New Orders
ISM®’s New Orders Index dropped to 49.2 percent in June, a decrease of 5.9 percentage points compared to the 55.1 percent reported in May. This indicates that new order volumes contracted after growing for 24 consecutive months. “Two of the six largest manufacturing sectors — Petroleum & Coal Products; and Computer & Electronic Products — increased new orders at moderate-to-strong levels. Price elevation and extended lead times resulted in a continuing slowing in new order rates across the supply chain. Backlog sagged in the month due to the weakness in new orders,” says Fiore. A New Orders Index above 52.9 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
Of the 18 manufacturing industries, eight reported growth in new orders in June, in the following order: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Primary Metals; Plastics & Rubber Products; Computer & Electronic Products; and Miscellaneous Manufacturing. Seven industries reported a decline in new orders in June, in the following order: Wood Products; Furniture & Related Products; Paper Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Chemical Products; and Food, Beverage & Tobacco Products.
| New Orders | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 17.8 | 65.1 | 17.1 | +0.7 | 49.2 |
| May 2022 | 28.2 | 58.5 | 13.3 | +14.9 | 55.1 |
| Apr 2022 | 25.1 | 64.0 | 10.9 | +14.2 | 53.5 |
| Mar 2022 | 28.2 | 60.4 | 11.4 | +16.8 | 53.8 |
Production
The Production Index registered 54.9 percent in June, 0.7 percentage point higher than the May studying of 54.2 percent, indicating growth for the 25th consecutive month. “Of the top six industries, four — Petroleum & Coal Products; Computer & Electronic Products; Transportation Equipment; and Chemical Products — expanded in June. Hiring and materials availability continue to show signs of recovery, but factories are still struggling to hit optimum output rates — primarily due to high levels of employee turnover,” says Fiore. An index above 52.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
Ten industries reported growth in production during the month of June, in the following order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Nonmetallic Mineral Products; Computer & Electronic Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Chemical Products; Plastics & Rubber Products; and Fabricated Metal Products. The three industries reporting a decrease in production in June are: Textile Mills; Paper Products; and Furniture & Related Products.
| Production | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 27.4 | 60.9 | 11.7 | +15.7 | 54.9 |
| May 2022 | 23.9 | 59.2 | 16.9 | +7.0 | 54.2 |
| Apr 2022 | 27.5 | 61.0 | 11.5 | +16.0 | 53.6 |
| Mar 2022 | 25.7 | 62.3 | 12.0 | +13.7 | 54.5 |
Employment
ISM®’s Employment Index registered 47.3 percent in June, 2.3 percentage points below the May studying of 49.6 percent. “The index contracted for a second straight month after an eight-month period of expansion. This is the lowest studying since August 2020, when the index registered 47.1 percent. Of the six big manufacturing sectors, two (Computer & Electronic Products; and Food, Beverage & Tobacco Products) expanded. Survey panelists’ companies are still struggling to meet labor management plans, though there are more signs of improvement: A larger share of comments (14 percent in June, up from 7 percent in May) noted greater hiring ease. An overwhelming majority of panelists again indicate their companies are hiring. Among those respondents, 42 percent expressed difficulty in filling positions, up from 30 percent in May. Turnover rates remain elevated (29 percent of comments cited backfills and retirements, a decrease from 36 percent in May). Employment levels, driven primarily by turnover, remain the top issue affecting further output growth,” says Fiore. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Nine of 18 manufacturing industries reported employment growth in June, in the following order: Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. The six industries reporting a decrease in employment in June — in the following order — are: Paper Products; Petroleum & Coal Products; Furniture & Related Products; Miscellaneous Manufacturing; Chemical Products; and Transportation Equipment.
| Employment | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 17.9 | 63.7 | 18.4 | -0.5 | 47.3 |
| May 2022 | 21.8 | 55.4 | 22.8 | -1.0 | 49.6 |
| Apr 2022 | 21.0 | 61.9 | 17.1 | +3.9 | 50.9 |
| Mar 2022 | 24.4 | 65.2 | 10.4 | +14.0 | 56.3 |
Supplier Deliveries†
The delivery performance of suppliers to manufacturing organizations was slower in June, as the provider Deliveries Index registered 57.3 percent, 8.4 percentage points lower than the 65.7 percent reported in May. Five of the top six manufacturing industries (Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Chemical Products) reported slower deliveries. “Deliveries slowed at a slower rate compared to the previous month. The index continues to reflect suppliers’ difficulties in meeting demand from panelists’ companies, but there are clear signs of easing. In June, suppliers remained in a labor-constrained environment, based on panelists’ comments and the Employment Index remaining in contraction territory. Transportation networks reflected improvement compared to May. Among provider delivery comments, 6 percent noted stable month-over-month improvement,” says Fiore. A studying below 50 percent indicates faster deliveries, while a studying above 50 percent indicates slower deliveries.
Fourteen of 18 manufacturing industries reported slower provider deliveries in June, in the following order: Textile Mills; Furniture & Related Products; Apparel, Leather & Allied Products; Machinery; Printing & Related Support Activities; Primary Metals; Computer & Electronic Products; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Chemical Products. Three industries reported faster provider deliveries in June as compared to May: Nonmetallic Mineral Products; Wood Products; and Petroleum & Coal Products.
| Supplier Deliveries | %Slower | %Same | %Faster | Net | Index |
| Jun 2022 | 27.4 | 59.8 | 12.8 | +14.6 | 57.3 |
| May 2022 | 37.1 | 57.2 | 5.7 | +31.4 | 65.7 |
| Apr 2022 | 38.7 | 57.0 | 4.3 | +34.4 | 67.2 |
| Mar 2022 | 34.8 | 61.2 | 4.0 | +30.8 | 65.4 |
Inventories
The Inventories Index registered 56 percent in June, 0.1 percentage point higher than the 55.9 percent reported for May. “Manufacturing inventories expanded at a slightly faster rate compared to May. Of the six big manufacturing industries, four (Computer & Electronic Products; Machinery; Chemical Products; and Transportation Equipment) grew their inventories of manufacturing raw materials in June. Companies report a continued willingness to take early delivery of raw materials as well as building extra work in process to support quick conversion,” says Fiore. An Inventories Index greater than 44.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
Of 18 manufacturing industries, the eight reporting higher inventories in June — in the following order — are: Textile Mills; Apparel, Leather & Allied Products; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Chemical Products; Transportation Equipment; and Miscellaneous Manufacturing. The three industries reporting contracting inventories in June are: Paper Products; Nonmetallic Mineral Products; and Primary Metals. Seven industries reported no change in inventories in June as compared to May.
| Inventories | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 25.4 | 59.8 | 14.8 | +10.6 | 56.0 |
| May 2022 | 24.3 | 62.5 | 13.2 | +11.1 | 55.9 |
| Apr 2022 | 21.4 | 61.4 | 17.2 | +4.2 | 51.6 |
| Mar 2022 | 24.5 | 63.6 | 11.9 | +12.6 | 55.5 |
Customers’ Inventories†
ISM®’s Customers’ Inventories Index registered 35.2 percent in June, 2.5 percentage points higher than the 32.7 percent reported for May, indicating that customers’ inventory levels were considered much too low. “Customers’ inventories are too low for the 69th consecutive month, a positive for future production growth. For 23 straight months, the Customers’ Inventories Index has been at historically low levels,” says Fiore.
Two industries (Apparel, Leather & Allied Products; and Wood Products) reported customers’ inventories as too high in June. The 14 industries reporting customers’ inventories as too low during June — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Primary Metals; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Miscellaneous Manufacturing; Plastics & Rubber Products; Petroleum & Coal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Chemical Products.
| Customers’ Inventories | % Reporting | %Too High | %About Right | %Too Low | Net | Index |
| Jun 2022 | 75 | 11.1 | 48.1 | 40.8 | -29.7 | 35.2 |
| May 2022 | 75 | 12.8 | 39.7 | 47.5 | -34.7 | 32.7 |
| Apr 2022 | 76 | 10.5 | 53.2 | 36.3 | -25.8 | 37.1 |
| Mar 2022 | 69 | 7.3 | 53.6 | 39.1 | -31.8 | 34.1 |
Prices†
The ISM® Prices Index registered 78.5 percent, 3.7 percentage points lower compared to the May studying of 82.2 percent, indicating raw materials prices increased for the 25th consecutive month, at a slower rate in June. The Prices Index has exceeded 70 percent in 18 out of the last 19 months and been above 60 percent for 22 straight months. “Continued oil and fuel price increases, packaging supplies (including corrugate), food ingredients, and petroleum-based products and petrochemicals were the primary causes of prices growth. Notably, 8.3 percent of respondents reported lower prices in June, supporting a continued slow but steady move towards price softening,” says Fiore. A Prices Index above 52.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.
In June, 17 of 18 industries reported paying increased prices for raw materials, in the following order: Petroleum & Coal Products; Textile Mills; Paper Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Chemical Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Primary Metals; and Fabricated Metal Products. No industry reported paying decreased prices for raw materials in June.
| Prices | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 65.2 | 26.5 | 8.3 | +56.9 | 78.5 |
| May 2022 | 70.2 | 24.2 | 5.6 | +64.6 | 82.2 |
| Apr 2022 | 73.5 | 22.1 | 4.4 | +69.1 | 84.6 |
| Mar 2022 | 75.1 | 24.0 | 0.9 | +74.2 | 87.1 |
Backlog of Orders†
ISM®’s Backlog of Orders Index registered 53.2 percent in June, a 5.5-percentage point decrease compared to the 58.7 percent reported in May, indicating order backlogs expanded for the 24th straight month. Of the six largest manufacturing sectors, three — Petroleum & Coal Products; Machinery; and Computer & Electronic Products — expanded their order backlogs. “Backlogs expanded in June at a slower rate, as output remains stable at relatively low levels and new orders have slowed due to excessive lead times and historically high prices,” says Fiore.
Nine industries reported growth in order backlogs in June, in the following order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Textile Mills; Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Computer & Electronic Products; and Miscellaneous Manufacturing. The four industries reporting lower backlogs in June are: Furniture & Related Products; Paper Products; Fabricated Metal Products; and Chemical Products.
| Backlog of Orders | % Reporting | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 93 | 25.6 | 55.3 | 19.1 | +6.5 | 53.2 |
| May 2022 | 91 | 31.6 | 54.3 | 14.1 | +17.5 | 58.7 |
| Apr 2022 | 92 | 27.9 | 56.3 | 15.8 | +12.1 | 56.0 |
| Mar 2022 | 92 | 29.8 | 60.4 | 9.8 | +20.0 | 60.0 |
New Export Orders†
ISM®’s New Export Orders Index registered 50.7 percent in June, 2.2 percentage points below the May studying of 52.9 percent. “The New Export Orders Index grew for the 24th consecutive month, at a slower rate in June. For the fourth straight month, COVID-19 in China has suppressed customer demand from overseas, and the war in Ukraine has limited European demand. Of the six big industry sectors, two — Food, Beverage & Tobacco Products; and Computer & Electronic Products — expanded,” says Fiore.
The five industries reporting growth in new export orders in June are: Paper Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. The five industries reporting a decrease in new export orders in June are: Wood Products; Primary Metals; Machinery; Transportation Equipment; and Miscellaneous Manufacturing. Six industries reported no change in exports in June as compared to May.
| New Export Orders | % Reporting | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 72 | 12.3 | 76.8 | 10.9 | +1.4 | 50.7 |
| May 2022 | 73 | 14.6 | 76.6 | 8.8 | +5.8 | 52.9 |
| Apr 2022 | 73 | 10.7 | 84.1 | 5.2 | +5.5 | 52.7 |
| Mar 2022 | 72 | 14.3 | 77.7 | 8.0 | +6.3 | 53.2 |
Imports†
ISM®’s Imports Index registered 50.7 percent in June after contracting in May, an increase of 2 percentage points compared to May’s figure of 48.7 percent. “Imports grew marginally in June. Import demand remains strong entering the back-to-school and holiday import seasons,” says Fiore.
The 12 industries reporting growth in imports in June — in the following order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. Three industries reported lower volumes of imports in June: Petroleum & Coal Products; Paper Products; and Chemical Products.
| Imports | % Reporting | %Higher | %Same | %Lower | Net | Index |
| Jun 2022 | 84 | 14.4 | 72.5 | 13.1 | +1.3 | 50.7 |
| May 2022 | 85 | 13.4 | 70.6 | 16.0 | -2.6 | 48.7 |
| Apr 2022 | 83 | 13.2 | 76.5 | 10.3 | +2.9 | 51.4 |
| Mar 2022 | 83 | 15.2 | 73.1 | 11.7 | +3.5 | 51.8 |
†The provider Deliveries, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders, and Imports indexes do not meet the accepted criteria for seasonal adjustments.
Buying Policy
The average commitment lead time for Capital Expenditures in June was 186 days, an increase of eight days compared to May and another all-time high. (ISM® began tracking lead times data in 1987.) CapEx lead times have increased in 10 of the last 12 months, for a net gain of 38 days since July 2021 (148 days). Average lead time in June for Production Materials increased by one day to return to its all-time high of 100 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased by four days, to 44 days.
| Percent Reporting | ||||||||||||
| Capital Expenditures | Hand-to- Mouth | 30 Days | 60 Days | 90 Days | 6 Months | 1 Year+ | Average Days | |||||
| Jun 2022 | 15 | 6 | 7 | 9 | 31 | 32 | 186 | |||||
| May 2022 | 17 | 5 | 8 | 10 | 30 | 30 | 178 | |||||
| Apr 2022 | 18 | 4 | 6 | 14 | 30 | 28 | 173 | |||||
| Mar 2022 | 18 | 3 | 8 | 14 | 29 | 28 | 172 | |||||
| Percent Reporting | ||||||||||||
| Production Materials | Hand-to- Mouth | 30 Days | 60 Days | 90 Days | 6 Months | 1 Year+ | Average Days | |||||
| Jun 2022 | 8 | 19 | 23 | 25 | 18 | 7 | 100 | |||||
| May 2022 | 9 | 21 | 21 | 26 | 15 | 8 | 99 | |||||
| Apr 2022 | 9 | 16 | 26 | 24 | 18 | 7 | 100 | |||||
| Mar 2022 | 8 | 21 | 23 | 26 | 15 | 7 | 96 | |||||
| Percent Reporting | ||||||||||||
| MRO Supplies | Hand-to- Mouth | 30 Days | 60 Days | 90 Days | 6 Months | 1 Year+ | Average Days | |||||
| Jun 2022 | 25 | 39 | 19 | 12 | 5 | 0 | 44 | |||||
| May 2022 | 27 | 35 | 19 | 12 | 6 | 1 | 48 | |||||
| Apr 2022 | 24 | 33 | 23 | 15 | 4 | 1 | 49 | |||||
| Mar 2022 | 24 | 33 | 22 | 16 | 5 | 0 | 48 | |||||
Posted: July 5, 2022
Source: Institute for Supply Management
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Singapore Street
However, both remained within expansionary terrain.
The manufacturing PMI clocked in at 50.3 in June, slightly down from the 50.4 studying in May but remaining above the 50-point threshold that separates expansion from contraction in the sector. The studying marked the 24th consecutive month of expansion in the manufacturing sector.
Meanwhile, the electronics PMI rose to 50.8 in June from 50.5 in May, logging the 23rd consecutive month of expansion for the sector.
Commenting on the readings, Sophia Poh, vice president at SIPMM, noted:
“The overall manufacturing sector has recorded continued expansion throughout the first half of the year, with the latest PMI studying indicating strong performance for the electronics industry. This positive outlook is indeed heartening, considering several headwinds facing the Singapore economy, and primarily due to the continuing Russia-Ukraine conflict.”
FocusEconomics Consensus Forecast panelists expect manufacturing output to expand 5.9% in 2022, which is up 0.7 percentage points from last month’s estimate, and grow 2.5% in 2023. ■
Returning for its 6th Edition, The Project Management Conference will once again bring together the leading business people from different industries in Cyprus. This year’s event organized by PMI Cyprus Chapter, is taking place on the 18th of November, at Hilton Nicosia and aims to offer its attendees a cross-border learning experience, engaging discussions, and vibrant networking opportunities.
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Following a slight May gain, June manufacturing output fell, while remaining on the right side of growth, according to the most recent edition of the Manufacturing Report on Business, which was issued today by the Institute for Supply Management (ISM).
The report’s key metric, the PMI, came in at 53.0 (a studying of 50 or higher indicates growth), for a 3.1% decrease compared to May’s 56.1 reading, marking the 25th consecutive month of growth, at a faster rate, as well as the 25th consecutive month of overall economic growth.
June’s PMI studying is 5.2% below the 12-month average of 58.2, also marking the lowest studying over the last 12 months and also the lowest going back to June 2020’s 52.4. The high over that period is October’s 60.8.
ISM reported that 15 manufacturing sectors reported growth in June, including: Apparel, Leather & Allied Products; Textile Mills; Printing & Related Support Activities; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products. The three industries reporting contraction in June compared to May are: Paper Products; Wood Products; and Furniture & Related Products.
The report’s key metrics were largely down in June, including:
•New orders, which are commonly viewed as the engine that drives manufacturing, decreased 5.9%, to 49.2 contracting after 24 months of growth, with eight sectors seeing gains;
•Production, at 54.9, increased 0.7%, growing, at a faster rate, for the 25th consecutive month, with 10 sectors seeing gains;
•Employment, at 47.3, fell 2.3%, contracting, at a faster rate, for the second straight month, with nine sectors seeing gains;
•Supplier Deliveries, at 57.3 (a studying above 50 indicates contraction), slowed at a slower rate, for the 76th consecutive month, with 14 sectors reporting slower deliveries;
•Backlog of orders, at 53.2, growing, at a slower rate, for the 24th consecutive month;
•Inventories, at 56.0, were essentially flat, up 0.1%, growing, at a faster rate, for the 11th consecutive month;
•Customer inventories rose 2.5%, to 35.2, slowing for the last 69 months; and
•Prices fell 3.7%, to 78.5, increasing, at a slower rate, for the 25th consecutive month.
Comments submitted by the ISM member respondents highlighted various themes, including: high backlog and a slowing of incoming orders; high inventories; and material availability issues, among others.
In an interview, Tim Fiore, Chair of the ISM’s Business Survey Committee, described the June report as “complicated,” in that inputs for consumption and demand, moved in the right direction towards equilibrium, with provider deliveries, while tailing off in what he called the proper tension range.
“Prices are coming down slowly but surely, which is good, as you cannot run on these elevated prices forever, and are causing the Fed to do things that have people concerned,” he said.
On the consumption side, he said seasonality factors drove down production somewhat from its preferred range of 58-to-60, because there are still issues in keeping workers on factory floors.
“Companies are still hiring but what has markets concerned is that demand fell off, with contraction in new order levels and as a result of that you see backlog of orders coming down, because without growth in new orders, you are going to consume your backlog,” he explained. “This is the fourth month of this overordering impact. Buyers are still sitting there with excessively long lead times as prices are coming down. Whatever is happening on the new orders side is happening so far out in the order books that it is not an issue. I am looking for lead times to come down around 5%.”
On the employment front, Fiore said that manufacturers would not be hiring people if they were concerned about laying them off in September or even January, adding that by continuing to hire, the manufacturing community is saying that whatever is happening on the new orders and demand side is not viewed as pertinent to the near-future over the next six-to-12 months.
“It is really just adjusting for excessively long lead times in new order books, with buyers now pausing, making those lead times come down,” he said. “And prices are moving in the right direction, too, with decreases happening, which everyone wants. Demand is not being destroyed in manufacturing at the moment.”
July 7, 2022