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ISM Mfg Index  
Released On 2/1/2010 10:00:00 AM For Jan, 2010
PriorConsensusConsensus RangeActual
ISM Mfg Index - Level55.9 55.0 54.0  to 57.0 58.4 

Highlights
The pace of month-to-month growth in the manufacturing sector rose sharply in January, driven by a red-hot pace of new orders that accelerates higher each month and points to exceptional overall growth through the rest of the first quarter. The ISM's manufacturing index jumped more than 3 points to 58.4 for its sixth straight indication of month-to-month growth (plus 50). New orders posted their third straight reading over 60, rising more than 1 point to 65.9. Exports, centered in electronics, are driving conditions in the manufacturing sector, with the new export order index up 4 points to 58.5.

New orders are now spilling into backlogs which showed a sharp 6 point rise to 56.0. Rising backlogs will use up still idle production capacity leading to a round of hiring. The employment index did rise, up more than 3 points to 53.3, a level however that has not been consistent with growth in factory payrolls. Inventory destocking eased and inventory restocking may already be underway. The inventory index, up more than 3 points at 46.5, is in an area consistent with flat conditions.

The pace of demand is evident in input prices as manufacturers bid up the price of raw materials. The prices paid index jumped 8-1/2 points to 70.0. However, indications on the output side, not available in this report, are pointing to no pricing power yet for finished goods. Today's report is very strong and points to a V-recovery for the manufacturing sector, a sector all through the second half of last year that was at the center of economic recovery. The stock market is jumping in early reaction to this report.

Recent History Of This Indicator
The composite index from the ISM manufacturing survey posted solid month-to-month growth in December, rising to 55.9 from the 53.6 reading in November. The composite has been in positive growth territory for five consecutive months. Healthy results are likely for January based on the forward momentum suggested by December's ISM new orders index which jumped 5.2 points to 65.5-indicating moderately strong growth.

Definition
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
 
[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
 
 

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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