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ISM Mfg Index  
Released On 1/4/2010 10:00:00 AM For Dec, 2009
PriorConsensusConsensus RangeActual
ISM Mfg Index - Level53.6 54.8 52.0  to 55.5 55.9 

Growth in the manufacturing sector is accelerating quickly, according to the ISM report which opens the New Year on a strong economic note. The headline composite index shows solid month-to-month growth in December at 55.9, greater month-to-month growth than the 53.6 reading in November. But the surprise in the report is new orders which, despite a run of very strong gains in prior months, jumped more than 5 points to 65.5. This is exactly where strength in the report should be, pointing as it does to rising activity through the manufacturing sector in the months ahead.

Ongoing production continues to show strong monthly gains, at 61.8 vs. November's 59.9. Delivery times continue to slow, at 56.6 in the month and consistent with the rise in activity. Inventories remain lean at 43.4 and backlogs are unchanged at 50.0. Manufacturers are no longer cutting their workforce with the employment index rising more than 1 point to 52.0. Input prices are rising in further evidence of strength with prices paid jumping more than 6 points to 61.5.

Today's report is surprisingly strong and will lift expectations for first half economic recovery led by the manufacturing sector. Equities and commodities rose in immediate reaction to the report.

Consensus Outlook
The composite index from the ISM manufacturing survey edged back 2.1 points in November to 53.6. However, the above-50 level (above breakeven) indicates that manufacturing is still growing. Looking ahead, leading indicators are mixed but mostly suggest an improvement for December ISM manufacturing index. Importantly, the ISM new orders index in November rebounded to 60.3 from 58.5 in October. Also, the December Philly Fed manufacturing index posted a sizeable gain. In contrast, the Empire State manufacturing index fell sharply.

The manufacturing composite index from the Institute For Supply Management 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 adjusted into a diffusion index which is calculated by adding the percentage of positive responses to one-half of the unchanged responses.  Why Investors Care
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

2010 Release Schedule
Released On: 1/42/13/14/15/36/17/18/29/110/111/112/1
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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