Manufacturing PMI Contracts Slight Environmental Supply Chain Issues (Feb 2024)

Manufacturing information from Institute of Supply Management has been released and it may make you a bit confused because there is growth in some areas and a few declines in others. 🤔🤷 Read Manufacturing PMI® at 47.8% February 2024 Manufacturing ISM® Report On Business and then consider the following highlights and info to ponder what is going on in the market and how that could potentially impact U.S. manufacturing as it seeks to become a stronger powerhouse serving the global market with leading edge outputs. 

(What I'm looking at from a research standpoint is platform changes where manufacturing and GDP is functioning on a higher economic platform level overall. That might include more adaptability and much more human capital creativity. It will likely come with some positive and negative aspects of society but they are generally from a national/species standpoint going to be positive on a long tail trend. Economic Sociological Platforms)

The highlights,

1. ISM manufacturing PMI falls to 47.8 in February
2. New orders, employment measures decline
3. Construction spending slips 0.2% in January

Moving a little deeper into the data we find that overall the economy is still growing. New orders declined but exports have risen substantially. Exports are a wealth generator for nations such as the U.S. and when at the highest point of value creation within the supply chain can propel growth (Assuming profits are invested back into the U.S. economy at various places to push innovation and growth.)

Both the new order contraction and the new export rise could lead to emerging trends. A number of months must pass before we can say either are a trend and beyond normal fluctuation. (Contributions GDP from Exports, '23)

What we can say is that 3/6 Fabricated Metal Products; Chemical Products; and Transportation Equipment are rising and these are more fundamental to economy.

Just to throwing out an idea.... 

Geopolitical issues may have an impact on both orders and exports. For example, if the supply chain is becoming costly than companies may wait on unnecessary orders to a later date. Hopefully, the contraction is short lived.

You may be interested reading on how supply chain issues can impact monthly fluctuations in GDP. By extension it would impact indexes that measure growth and decline of manufacturing. "Both DL and ANN outputs empirically (and unanimously) demonstrated how sensitive monthly GDP variations are to dynamic changes in supply chain performances." (Shazad, 2023, para 15)

Likewise, new orders could be related to shifts in the broader supply chain as decoupling of large economies occur. No one can say for sure because there just isn't enough information and as soon as the environment shifts, the numbers might shift.

We have a lot of things we can still do to improve our mid and long term prospects in the U.S. as it relates to human capital, SME, innovation, and manufacturing. That also includes more broad based capitalism by improving incentives at various levels of society as pathways to human capital and business development. 

Growth could continue to strengthen based on more recent updates to our infrastructure but we will have to see what the long term trend indicates. 

The central infrastructure that allows for companies to succeed on a micro scale through the many trillions of transactions that form an economy could  find a level of cross structure synergy (Cross Structure Synergy ). In hypothetical terms value, velocity, and reach of those transactions influences growth.  

(I also found a nice article in Reuters. 'US manufacturing contracts further, rays of light on the horizon')

The following is quoted, 

MANUFACTURING AT A GLANCE
February 2024

Index	Series Index Feb	Series Index Jan	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
Manufacturing PMI®	47.8	49.1	-1.3	Contracting	Faster	16
New Orders	49.2	52.5	-3.3	Contracting	From Growing	1
Production	48.4	50.4	-2.0	Contracting	From Growing	1
Employment	45.9	47.1	-1.2	Contracting	Faster	5
Supplier Deliveries	50.1	49.1	+1.0	Slowing	From Faster	1
Inventories	45.3	46.2	-0.9	Contracting	Faster	13
Customers’ Inventories	45.8	43.7	+2.1	Too Low	Slower	3
Prices	52.5	52.9	-0.4	Increasing	Slower	2
Backlog of Orders	46.3	44.7	+1.6	Contracting	Slower	17
New Export Orders	51.6	45.2	+6.4	Growing	From Contracting	1
Imports	53.0	50.1	+2.9	Growing	Faster	2
OVERALL ECONOMY				Growing	Slower	46
Manufacturing Sector				Contracting	Faster	16

Shahzad, U. et. al, (2023) 'GDP responses to supply chain disruptions in a post-pandemic era: Combination of DL and ANN outputs based on Google Trends", Technological Forecasting and Social Change, vol. 192, 122512, ISSN 0040-1625, https://www.sciencedirect.com/science/article/abs/pii/S004016252300197X