Econoday Economic Report: ISM Mfg Index June 1, 2012

2012 Economic Calendar

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ISM Mfg Index

Released On 6/1/2012 10:00:00 AM For May, 2012

	Prior	Consensus	Consensus Range	Actual
ISM Mfg Index - Level	54.8	54.0	51.0 to 54.5	53.5

Highlights
In surprising good news, the ISM's new order index is up nearly 2 points to 60.1 for the strongest rate of monthly growth since April last year. New orders are life's blood and will trigger wider activity in the months ahead. For May, production growth slowed but remains healthy while employment growth in the factory sector, as it was in today's employment report, is steady and healthy. Inventories are coming down even as new orders pick up, a combination that points to the need for inventory building which is a solid positive.

Areas of mild concern are backlog orders, which are contracting, and new export orders which are slowing. A positive is monthly contraction in raw material prices which will give manufacturers the flexibility to add to capacity including to their workforces.

The details in this report are stronger than the headline, which slipped 1.3 points to 53.5. But new orders are a highlight of this report with the Dow now moving off opening lows.

Market Consensus before announcement
The composite index from the ISM manufacturing survey in April rose 1.4 points to 54.8. Importantly, the new orders index was up to 58.2 from 54.5 in March, showing sizably greater monthly growth. Production was strong and, importantly, manufacturers in the sample added significantly to their payrolls.

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

2012 Release Schedule

Released On: 1/3 2/1 3/1 4/2 5/1 6/1 7/2 8/1 9/4 10/1 11/1 12/3

Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov