Econoday Economic Report: ISM Mfg Index May 2, 2011

2011 Economic Calendar

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ISM Mfg Index

Released On 5/2/2011 10:00:00 AM For Apr, 2011

	Prior	Consensus	Consensus Range	Actual
ISM Mfg Index - Level	61.2	59.5	58.0 to 60.5	60.4

Highlights
Rates of growth for new orders and production slowed in April's ISM manufacturing report, but the rate of hiring remained very strong and backlog orders shot up. The rise in backlogs could be tied to Japanese supply disruptions but Japan doesn't seem to have had a major effect on delivery times where delays eased slightly in the month. Inventory accumulation is a standout in the April report and could be pointing to preparation for future production.

The numbers show a very solid 60.4 reading for the headline index for the fourth plus 60 reading this year. Employment is also in rare plus-60 ground and shows its fourth such reading this year, as does the backlog index.

The manufacturing sector kept up its pace during the first quarter and the first look at the second quarter points to more solid growth. Demand for risk is rising in early reaction to this report.

Market Consensus before announcement
The composite index from the ISM manufacturing survey eased in March, edging down 0.2 points, but still came in at a strong reading of 61.2. Strength was in a slowing in supplier deliveries and continued healthy production and employment. Looking ahead, the new orders index showed deceleration to 63.3 in March from 68.0 the prior month.

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

2011 Release Schedule

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