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Growth in the U.S. manufacturing sector unexpectedly slowed in February, after three consecutive monthly increases. The index fell from 54.1 to 52.4 in February, reversing around half of the gains of the previous three months. However, the decline in February does not raise any immediate concerns as the details of the report are not horrible. The ISM manufacturing index has remained above its expansionary threshold for 31 straight months.


New orders led the decline, falling to 54.9 from 57.6. The decline in new orders should be interpreted caully as new orders have recently been unstable.

Production and employment both declined in February to 55.3 and 53.2 respectively. February is the third consecutive decline in the employment index.

The inventories index remained constant at 49.5, below the contrationary level for the fifth consecutive month.

Exports orders continue to rise despite turmoil in Europe, climbing from 55.0 to 59.5 in February.

Read the full report.

The ISM’s non-manufacturing index fell in March to 56.0 from 57.3 reported in February. While the index remained above contractionary levels, this is the first time this year the index has slowed and is at its lowest level since December. The more than expected decline is not too worrisome as the details remain mixed.


Both employment and inventory indices rose in March. Employment rose to 56.7 in March from 55.7. While inventory rose to 54.0 from 53.5 in February.

The business activity and new orders indices both fell. The business activity index fell to 58.9 from 62.6 in February. New orders fell to 58.8, from a high of 61.2 in February.

Supplier deliveries stayed constant at 49.5 in March, after the index fell in February to the first contraction level since September.

The trade details were negative in February as well, with the export index falling 2 points to 52.5. Much of this is likely due to decreased demand from Europe.

Read the report.

Manufacturing made strong progress in October, with the ISM’s manufacturing index rising from 51.5 to 51.7. Although the improvement in the overall index was modest, the details of the report were strong, indicating further improvement in coming months. Currently, the index is at its highest levels since May.



Despite only rising 0.2 points in October, movement within the survey’s components suggest a strong trend. Specifically, new orders picked up 1.9 points, rising to 54.2. In addition a 0.5 point decline in inventories put inventory accumulation at its neutral threshold of 50. The gap between new orders and inventories, a proxy for future production, more than doubled to 4.2 points.

Production returned to positive territory in October, reaching 52.4. The employment portion of the index gave up some of the outsized gain it experienced in September but remained strong at 52.1. The weak global economy continues to drag on growth, with new export orders falling farther into negative territory in October, reaching 48.0.

Read the ISM release.

In daily production there are 7 wastes that need to be treat well in order to achieve maximum profit and high productivity. In Lean manufacturing or Toyota Production System the 7 wastes are:

1.Overproduction,

2.Waiting time,

3.Transportation,

4.Inventory - over stock (unnessary stock),

5.Too many motion,

6.Over processing and,

7.Defective parts or unit also known as rejection.

In order to reduce or eliminate the waste a 7 principles was developed by Toyota known as the 7 principles of Toyota Production System.

1. Reduce setup times.

All setup process that are implemented are a waste because of they tie up to labor and equipment. By organizing procedures, using carts and highly skill workers to do their own setup (self management), Toyota managed to reduce setup times.

2. Small Lot Production:

Producing products in a big lots result in a high setup cost, high capital cost of high speed machinery, larger inventories, long lead time, and of course large defect cost.

3. Employee Involvement:

Toyota organized their workers by forming teams and gave them the responsibility and training to do many specialized tasks. Teams are also given responsibility for housekeeping and minor equipment repair. Each team has a leader who also works as one of them on the line.

4. Top Quality control:

Quality is well control at each station of production line. The concept not to pass defective product to next process which control by the owner(operator) of that process has help a lot of Toyota production line. Any defective product found must be discovered and corrected as soon as possible and therefore to achieve the objective responsibility is given to the owner of that process. If it cannot be fixed, he can stop the line by pulling stop cord called Jidoka.

5. Equipment Maintenance:

One of the major contributors to line stoppage and defective is come from failed equipment. Therefore beside Maintenance people maintaining the equipment, Toyota operator are also assigned for basic maintenance task such cleaning and lubricating. Most important is that the operator is in the best position to detect any abnormality of the equipment. This known as a Total Productive Maintenance.

6. Pull Production.

To reduce inventory holding costs and lead times, Toyota developed the pull production method wherein the quantity of work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage. The Kanban scheme coordinates the flow of small containers of materials between stages. This is a commonly known as Just-In-Time (JIT).

7. Supplier Involvement.

Supplier or vendors is a partner to Toyota. In Toyota Production System supplier shall involve and train together to achieve target for both side.

The service sector growth cooled in March, falling to the lowest level since August. The ISM non-manufacturing index fell to 54.4 in March from 56.0 the previous month. Despite the decline, services continue to outperform the manufacturing sector, which declined to 51.3 in March. Any reading over 50 indicated industry expansion.



The details of March’s report declined across the board except for supplier deliveries and backlogs. The employment index dropped 3.9 points to 53.3. Overall business activity edged lower to 56.5 index points, losing 0.4 points from the previous month.

Despite the overall decline in March, the indexes remained above the neutral threshold of 50, signaling an expansion, albeit at a slower rate then the previous month.

A copy of the press release can be found here.

The ISM’s manufacturing index plunged in June, entering contractionary territory for the first time since the recovery began. June’s reading fell 3.8 points to 49.7, below the expansionary threshold of 50. This month’s report is the first contraction reported since July 2009.



Many of the details in June’s report were weak as well. The new orders index plunged 12.3 points, to 47.8, its biggest drop since 1980. The production index dropped 4.6 points, however, remained in expansionary territory at 51.0.

Employment was the one bright spot in June, falling a modest 0.3 points and remaining at a relatively high 56.6. Employment, however, is a lagging indicator, and may catch up with the other indicators in the next report.

Read the ISM release.