Highlights
The ISM manufacturing report shows less weakness in what may offer hope that economic contraction is slowing. The ISM's manufacturing index rose more than 2-1/2 points to 35.6 reflecting, fortunately, improvement in new orders which rose to 33.2 from 23.1. The 10-plus point move seems dramatic but the 33 level is still very low and indicates that many more manufacturers are reporting month-to-month weakness than strength. Backlog orders likewise improved, up 6-1/2 points to 29.5.

The employment index, unfortunately, did not improve, holding unchanged at a 29.9 level that points squarely at continued and severe payroll contraction for the manufacturing component in Friday's employment report. Other readings included an 11 point rise in prices paid to 29.0 that also suggests demand destruction is slowing. Inventories, at 37.5, are contracting but not fast enough given the general decline in demand and given a 55.5 reading in customer inventories which indicates manufacturers think supplies at other companies are too high.

In the December report all 18 industries in the report showed contraction while January saw two industries rebound. Stocks firmed slightly in reaction to the results which may not support a new optimism but on the other hand does not justify greater pessimism.

Market Consensus before announcement
The Institute for Supply Management's manufacturing index in December showed a worsening in the contraction of the manufacturing sector. The headline index dropped to 32.4 -- one of the very lowest readings in 60 years of data and down from 36.2 the month before. Looking ahead, the picture is still gloomy. The new orders index has contracted 13 consecutive months and is at the lowest level on record as is the index for orders backlogs.

ISM manufacturing index Consensus Forecast for January 09: 32.6
Range: 30.0 to 36.0

2009 Release Schedule

Released On: 1/2 2/2 3/2 4/1 5/1 6/1 7/1 8/3 9/1 10/1 11/2 12/1 Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov