ISM Manuf Survey

Background:  As we noted post the Chicago release yesterday, the ISM national survey is thorough; it canvases 18 manufacturing industries questioned by the way of Production, New orders, Supplier deliveries, Inventories, Employment, and  Exports and Imports.

Then a diffusion process is applied to the answers, which recall can be only “better,” “same” or “worse.” The result is calculated by taking the percentage of respondents that reported conditions better than the previous month and adding to that total, half of the percentage that reported no change in conditions. Thus, a 50 would indicate and equal number of respondents reporting “better conditions” and “worse conditions.”

Result:  This measure hit the highest level in Jan (54.1) since June/11.  The pace of growth nationwide is not booming (it is in some regions) but is still gathering momentum, all in. This is true despite today’s less-than-expected result.  But the Feb print did not fit our anchor set for this sector, being weaker than consensus. Thus we did not provide a reliable set for our clients.  We must be careful not to marry any view. Perhaps manufacturing is due for a pause, Q2, but we doubt that.

We see today that New Orders grew a tad slower than earlier, that Export orders grew more quickly than earlier, that the pace of Production growth came in just a tad and that Inventories declined slightly.  Finally, we see that Employment grew just a bit less quickly. Still, this was the twenty-ninth consecutive month of expansion for factory jobs, which of course bodes well for manuf jobs in next weeks NFP report.

The factory sector has grown for 31 consecutive months. No barn burner, but if we recall estimates for this activity several months ago, it was for stagnation. We could not predict for our clients then the exact result, but we did predict that these results would flatten estimates. We’re not prefect as today’s miss shows and so will re-gather at bit, gain some perspective, and be back.


Robert Craven