Econoday Economic Report: ISM Mfg Index February 1, 2011

2011 Economic Calendar

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ISM Mfg Index

Released On 2/1/2011 10:00:00 AM For Jan, 2011

	Prior	Consensus	Consensus Range	Actual
ISM Mfg Index - Level	57.0	57.5	56.5 to 59.5	60.8

Highlights
Indicating a true surge underway in the nation's manufacturing sector, the ISM composite index jumped nearly 2-1/2 points to a rare plus 60 reading at 60.8 for a seven-year high (prior month revised to 58.5). New orders are the leading component, up nearly six points to 67.8 in a gain that points to a run of 60 readings ahead for the composite index. The other four components of the composite also show month-to-month acceleration including employment which is also in rare territory at 61.7 for a nearly two-point gain and the first plus-60 reading in seven years.

The strength of activity in part reflects rising prices with input prices which jumped nine points to a rare plus-80 reading at 81.5. The gain reflects rising prices for energy, metals and chemicals. Other readings include a big surge in backlog orders and in new export orders.

Manufacturing, supported by rising global demand for our goods, is clearly the economy's leading driver. Stocks are rising and money is moving out of the safety of Treasuries following the results.

Market Consensus before announcement
The composite index from the ISM manufacturing survey rose four tenths in December to 57.0, well over 50 to indicate significant monthly growth for the month. This was the healthiest reading since May 2010. We should get another favorable reading for January as the new orders index jumped 4.3 points to 60.9 in December-the highest level also since May 2010.

Definition
The Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. A composite diffusion index of national manufacturing conditions is constructed, where readings 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

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

2011 Release Schedule

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