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. (Institute for Supply Management) Why Investors Care
| Released on 12/1/08 For Nov 2008 | ||||||||||||
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Highlights
The contraction underway in the manufacturing sector is of historic proportions, the results of November's ISM manufacturing report that shows a headline index of 36.2, down nearly 3 points in the month. The reading is the lowest since 1980 recession. Key components in the survey show greater weakness than the headline index including a 31.5 level for the production index that matches the record low in May 1980. New orders at 27.9 is at its lowest since the early 80s while, in perhaps the most stunning reading of all, prices paid is at 25.5, down 11.5 points in the month for the lowest reading since early data in 1949 -- a critical indication that demand is falling and falling very sharply. Financial markets showed limited immediate reaction to the report though the results are very likely to weigh on stocks and the dollar and push money deeper into the safety of Treasuries.
The Institute for Supply Management's manufacturing index showed a worsening in manufacturing in October, falling to 38.9 in October from 43.5 in September and far below the break-even 50 level. Readings were at levels last seen in the early 1980s. Orders data were disheartening, coming in even worse than the composite. The new orders index dropped to 32.2 from 38.89 in September while backlog orders came in at 29.5 versus 35.0 the previous month. Input prices plummeted as the prices paid index fell more than 15 points to 37.0.
ISM manufacturing index Consensus Forecast for November 08: 38.4
Range: 33.5 to 40.0
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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. |
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