PMI Jumps in August as Food and Beverage Industry Braces for Cost Increases

The Purchasing Managers’ Index (PMI) reached 61.3% in August, according to the Institute of Supply Management. That’s the highest it’s been in the last 12 months, marking the 112th consecutive month of growth in the overall economy and the 24th in the manufacturing sector. Despite the good news, representatives from the food and beverage industry noted that tariffs and inflation could lead to cost increases in 2019.

Here’s what the food, beverage, and tobacco industry reported for August:

• Growth in new orders

• Growth in production

• Growth in employment

• Slower supplier deliveries

• Higher raw materials inventories

• Customer inventories too low

• Increased prices for raw materials

• Decrease in order backlogs

• Growth in new export orders

• Growth in imports

In addition, the average lead time increased for capital expenditures, decreased for maintenance, repair, and operating (MRO) supplies, and stayed the same for production materials.

These results all represent continuing trends in the industry, which is also dealing with trade uncertainty and an ongoing struggle to find workers at all levels. Regarding the overall results, ISM chair Timothy R. Fiore commented: “Demand is still robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations. Panelists are actively evaluating how to respond to these business changes, given the uncertainty.”