Tempe, AZ – The manufacturing sector grew for the 27th straight month in August, although high energy prices raise concerns for future growth. New orders and production slipped from July but remained strong, according to the latest Institute for Supply Management (ism.ws) poll.

ISM chairman Norbert Ore said, “[T]he PMI still indicates significant economic growth in both manufacturing and the overall economy. Comments from supply managers indicate great concern over recent new highs in the energy commodities. Many express concerns as to whether current business strength can be sustained if high energy prices persist.”

For the month the PMI measure of economic activity fell 3.0 points sequentially, to 53.6%. New orders dropped 4.2 points to 56.4%, while production fell 4.4 points to 55.9%.

Backlogs grew slightly, up 1.5 points to 50.5. Manufacturers shaved internal inventories, but customer stock levels grew 2.0 points. Employment fell but remained above the benchmark for growth.

Electronic components and equipment was the third strongest category during the month. Industrial and commercial equipment and computers also reported growth.

 

	April	May	June	July	Aug.
PMI	53.3	51.4	53.8	56.6	53.6
New orders	53.7	51.7	57.2	60.6	56.4
Production	56.7	54.9	55.6	61.2	55.9
Inventories	47.9	47.8	47.8	47.5	45.7
Customer inventories	41.5	47.5	44.0	44.5	46.5
Backlogs	53.0	51.0	51.0	49.0	50.5

Source: Institute for Supply Management, August 2005

LOS ALTOS – Have semiconductor inventories gotten out of whack? That’s the assessment one researcher is concluding, saying that the disparity between strong sales of end-use items and the drop in IC shipments suggests a “major inventory adjustment.”