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ISM Mfg Index
Released On 3/2/2009 10:00:00 AM For Feb, 2009
PriorConsensusConsensus RangeActual
ISM Mfg Index - Level35.6 33.8 30.0  to 36.9 35.8 

Highlights
Rates of decline are showing a welcome slowing trend in the manufacturing sector. The ISM manufacturing index edged 2 tenths higher in February to a 35.8 level that is meaningfully above December's low of 32.9. Readings on new and unfilled orders are stable with production improving. One good sign is a dip back in the customer inventory index, to 51.0 from 55.5 in January to indicate that fewer manufacturers say inventories at other businesses are too high, an indication that the intensity of destocking may be easing.

But employment is definitely not improving, instead contracting further, down nearly 4 points to 26.1, and pointing to yet another month of intense contraction in the manufacturing component of Friday's jobs report. Firms, as they do during downturns, are cutting back on their workforces even as conditions stabilize. Prices continue to contract, unchanged at 29.0 and underscoring that demand in the manufacturing sector remains weak. Today's report is a mild plus, but still a plus, for the economic outlook and may give the stock market a lift through the day.

Market Consensus before announcement
The Institute for Supply Management's manufacturing index was still in negative territory in January but not as deep as in December. The ISM's manufacturing index rose more than 2-1/2 points to 35.6 which is still well below the breakeven point of 50, indicating that contraction continues but at a less rapid pace. The freefall also slowed for the new orders index, which rose to 33.2 from a 23.1 but remained well in contraction territory. The decline in prices paid continued but not quite at the precipitous pace in December. The prices paid index rose to 29.0 from 18.0 in December. Looking ahead, manufacturing is likely to continue downward in the near term as demand has continued to fall in many sectors - including consumer, housing, business investment, and exports.

Definition
The ISM manufacturing composite index is a diffusion index calculated from five of the eleven sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms nationwide. The survey queries purchasing managers about the general direction of production, new orders, order backlogs, their own inventories, customer inventories, employment, supplier deliveries, exports, imports, and prices. The five components of the composite index are new orders, production, employment, supplier deliveries, and inventories (their own, not customer inventories). The five components are equally weighted. The questions are qualitative rather than quantitative; that is, they ask about the general direction rather than the specific level of activity. Each question is transformed into a diffusion index which is calculated by adding the percentage of positive responses to one-half of the unchanged responses.  Why Investors Care
 
[Chart]
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.
Data Source: Haver Analytics
 

 

2009 Release Schedule
Released On: 1/22/23/24/15/16/17/18/39/110/111/212/1
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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