2011 Economic Calendar
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ISM Mfg Index  
Released On 8/1/2011 10:00:00 AM For Jul, 2011
PriorConsensusConsensus RangeActual
ISM Mfg Index - Level55.3 54.3 52.0  to 55.4 50.9 

Highlights
Hit by weakness in new orders, the Institute For Supply Management's manufacturing index for July came in at a disappointing 50.9 vs what was an inflated 55.3 reading for June. The July index is still above 50 to indicate monthly expansion in business conditions but is now at the slowest rate so far of the recovery. New orders technically contracted in the month, coming in at 49.3 which however is only a little below break-even 50. Still, this is the first sub-50 reading since June 2009. Backlog orders contracted more deeply, down four points to 45.0 for the lowest reading since April 2009. Low levels of orders point to trouble for all other future readings including for, unfortunately, employment.

Employment, at 53.5, did expand in the month but is well down from 59.9 in June. This is the lowest level for employment since December 2009. Inventory, at 49.3, joined new orders in contraction during July. It was unusual strength in this reading that gave an unsustainable bounce to the composite index for June. Other readings include a slowing in production, a speeding up in deliveries which is a sign of weakness, and a slowing in input price inflation which, though boosting margins, is another sign of economic weakness.

Today's report is in line with regional manufacturing reports that have also been showing very flat conditions. The manufacturing sector, which has been the leading sector of the economy, appears to be in a summer slowdown. Hopefully, extension of the nation's debt ceiling will give a boost to August's results. Stocks are weakening in reaction this report.

Consensus Outlook
The composite index from the ISM manufacturing survey in June rose 1.8 percent to 55.3. However, inventories, one of five equally weighted components, jumped 5.4 points to 54.1. The new orders index showed only slight month-to-month acceleration at 51.6 compared to 51.0 in 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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