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 12/3/07 For Nov 2007 | ||||||||||||
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Highlights
Conditions appear to be steady in the U.S. manufacturing sector as ISM's index came in down 1 tenth in November to 50.8, a level that indicates only a very slight number more respondents are reporting improving conditions than declining conditions. New orders are probably the most important component in the report and it tells the same story, up 1 tenth at 52.6. Production bounced back on the month, up more than 2 points and back above the 50 level at 51.9. But backlog orders may be pointing to slowing production ahead as the index is showing steep month-to-month contraction at 41.5 vs. October's 46.0. But exports are a growing plus for U.S. manufacturers which are getting a boost from strength in foreign currencies. The new export index rose 1.5 points to 58.5.
There was concern among purchasers in prior reports that inventories were getting too heavy given the slowing outlook for demand. But today's data will ease those concerns as the customer inventories index fell 5 points to 49.0 to indicate that purchasers now think inventories at other manufacturers are now on the low side. The inventory index, which measures inventories at each respondent's firm, also dipped back, down 3 tenths to 46.9. Pressures on prices intensified due to high oil prices. The prices paid index, a worry for both manufacturers and Federal Reserve policy makers, rose 4.5 points to 67.5.
The manufacturing sector appears to be steady at a very modest rate of growth, but the sector is holding up pretty well given the troubles in the housing and financial sectors. There was little immediate effect on the financial markets.
The Institute for Supply Management's manufacturing index slipped to 50.9 in October from 52.0 in September with production a real drag, down 5 points to 49.6. New orders were marginally positive with export orders healthy. However, a key warning of pending slowing in manufacturing was a jump in customer inventories. Prices paid were high, coming in at 63.0 versus 59.0 in September due to high oil prices. More recently, the Chicago purchasing managers index was moderately positive for November, indicating that manufacturing has not fallen off a cliff and remains viable.
ISM manufacturing index Consensus Forecast for November 07: 50.4
Range: 49.5 to 52.0
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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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