2011 Economic Calendar
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ISM Mfg Index  
Released On 6/1/2011 10:00:00 AM For May, 2011
PriorConsensusConsensus RangeActual
ISM Mfg Index - Level60.4 57.5 55.0  to 59.5 53.5 

Highlights
Monthly growth slowed very significantly in the manufacturing sector during May, according to the Institute For Supply Management whose headline composite dropped 6.9 points to a much lower-than-expected 53.5. Importantly, new orders slowed a very significant 10.7 points to 51.0, still over 50 to indicate growth compared to April but well under April to indicate a much slower rate of growth. Manufacturers drew heavily on backlog orders which fell 10.5 points to 50.5.

Other readings show a significant slowing in production, a moderate slowing in hiring, and decreasing delays in delivery times that are consistent with slowing conditions. Inventories interestingly contracted in the month, suggesting that manufacturers were quick to keep levels down given slowing demand. It also perhaps reflects supply shortages tied to Japan.

The Japan effect is uncertain given that the report's transportation equipment group, which in this survey includes aerospace, reported increased activity in the month. But the report's general results hint at related trouble and add to the body of evidence that May was definitely a soft spot for the economy.

Consensus Outlook
The composite index from the ISM manufacturing survey decelerated slightly in April to 60.4 from 61.2 in March. Nonetheless, this is a very healthy pace. The composite index has been above the 60 mark for four consecutive months, indicating activity well above the breakeven mark of 50. Looking ahead, the indexes for new orders remained robust at 61.7 though lower than March's 63.3. However, more recent regional manufacturing surveys have shown significant softening for May.

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
 
 

2011 Release Schedule
Released On: 1/32/13/14/15/26/17/18/19/110/311/112/1
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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