Last Update: 02-Sep-14 10:27 ET
- The ISM Manufacturing Index increased to 59.0 in August, up from 57.1 in July. The Briefing.com consensus expected the ISM Index to fall to 57.0.
- That was the strongest reading since March 2011.
- While all of the regional Federal Reserve manufacturing surveys showed expansions in August, most of the surveys showed slight deteriorations in manufacturing activity. That led to expectations for a small decline in the overall ISM national manufacturing index.
- The Production Index strengthened, increasing to 64.5 in August from 61.2 in July. That followed a similar increase in New Orders (66.7 from 63.4). Future production looks stable as the Backlog of Orders Index rebounded from a contraction to 52.5 in August from 49.5 in July.
- The Employment Index fell very slightly to 58.1 from 58.2 in July.
- 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.
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