The Institute for Supply Management surveys nearly 400 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. A composite diffusion index of national manufacturing conditions is constructed, where reading 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
| Released on 10/1/07 For Sep 2007 | ||||||||||||
| ||||||||||||
Highlights
The pace in the U.S. manufacturing sector is steady and mild, according to the Institute For Supply Management's September index that dipped 9 tenths to 52.0. New orders slowed but still showed month-to-month improvement at 53.4 vs. 55.3. Production likewise slowed but also showed a month-to-month increase at 54.6 vs. 56.1. Remember, any reading above 50 indicates that a greater share of respondents are reporting a month-to-month increase than a decrease. Cost pressures remain elevated but are slowing, with the prices paid index down 4 points to 59.0.
Other readings included a surprise slowing in export orders to 54.5 vs. 57.0. Exports had been getting a boost from strong global demand and strong foreign currencies. Inventories were drawn down to an unusually low reading of 41.6, indicating that purchasers are getting cautious over the outlook for future production.
Today's data confirm the results of last week's durable goods report that showed, when July and August are taken together, a moderate pace for the manufacturing sector. The manufacturing sector isn't the source of strength for the economy but it doesn't appear to be a point of weakness. Financial markets showed little initial reaction to the results.
The Institute for Supply Management's manufacturing index dipped from 53.8 in July to 52.9 in August, bringing into question whether the manufacturing sector is still doing its part to keep the economy out of recession. The August number was still in positive territory but not by a lot. Given the reversal in new orders for durable goods in August after a strong July, the Fed likely will be giving the more current manufacturing surveys more attention than usual, heading into its October 30-31 policy meeting. But as of August, the ISM manufacturing report suggested continuing but slowing forward momentum as new orders and backlogs edged down within positive territory. Markets will be looking to see if the exports index continues to improve as is likely due to the declining dollar.
ISM manufacturing index Consensus Forecast for September 07: 52.9
Range: 51.0 to 54.0
![[Chart]](chart.gif)
|
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. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}