The Institute for Supply Management surveys nearly 400 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. A composite diffusion index of national manufacturing conditions is constructed, where reading above (below) 50 percent indicate an expanding (contracting) factory sector. Export orders, import orders, backlog orders and prices paid for raw and unfinished materials are also measured, but these are not included in the overall index. Why Investors Care
| Released on 2/1/07 For Jan 2007 | ||||||||||||
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Highlights
The Institute For Supply Management's manufacturing index stalled in January, down to a sub-50 contractionary reading of 49.3 vs. 51.4 in December. The reading is the second sub-50 reading in the last three months, marking a cyclical shift lower in line perhaps with the Federal Reserve's efforts to slow the economy.
New orders point to little change ahead, at 50.3 vs. 51.9. Backlog orders contracted further to 43.5 vs. 45.0 -- and inventories really fell back, down nearly 10 points to 39.9 in the lowest reading in 6 six years. The reading strongly indicates that manufacturers are putting on the supply-chain brakes, concerned that a slowdown in demand will lead to a backup in inventory.
Treasuries rallied and the dollar sank in immediate reaction to the results. But the results shouldn't be that much of a surprise given strong signals in prior ISM reports, namely weak orders readings, that point to no better than breakeven results in the months ahead.
The Institute for Supply Management's manufacturing index rebounded back into positive territory in December to 51.4, up from a 49.5 reading in November. After last week's strong durables orders report for December, this will be the first comprehensive look at manufacturing in January.
ISM manufacturing index Consensus Forecast for January 07: 52.0
Range: 50.4 to 53.0
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The ISM manufacturing index (formerly known as the NAPM Survey) is constructed so that any level at 50 or above signifies growth in the manufacturing sector. A level above 43 or so, but below 50, indicates that the U.S. economy is still growing even though the manufacturing sector is contracting. Any level below 43 indicates that the economy is in recession. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
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