Last Update: 01-Oct-15 10:34 ET
- The ISM Manufacturing Index declined to 50.2 in September from 51.1 in August. The Briefing.com Consensus expected the index to decline to 50.6 in September.
- If there is one bit of solace in the data, it is that manufacturing conditions – nationally – managed to stay in an expansion mode, albeit barely. The same could not be said for the regional data from the Federal Reserve manufacturing surveys, which showed sharp contractions in every area of the country.
- That said, there isn’t much hope that the index will manage to stay in an expansion mode in October.
- With the exception of Customer Inventories – which are reportedly too high – all of the sub-indices either declined or were unchanged in September. That included a notable drop in both the Production (51.8 from 53.6) and New Orders (50.1 from 51.7) Indices.
- Backlog levels suffered the biggest monthly decline as the index dropped to 41.5 in September from 46.5 in August. That was the fourth consecutive monthly contraction. Without a steady supply of backlogs, production growth will be difficult.
- This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
|Prices paid (not seas adj)