| ISM Mfg Index |
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Released On 5/1/2012 10:00:00 AM For Apr, 2012
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Prior | Consensus | Consensus Range | Actual |
| ISM Mfg Index - Level | 53.4 | 53.0 | 52.0 to 54.4 | 54.8 |
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Highlights
The ISM report is bucking the trend, showing rising rates of growth vs a host of other indications that point to slowing in the manufacturing sector. The composite gain of 1.4 points to 54.8 is better than expected with strength centered right where it should be, in new orders which, at 58.2 vs 54.5, show sizably greater monthly growth. Production is strong and, importantly, manufacturers in the sample are adding significantly to their payrolls. In a surprise, export orders, despite weakness in Europe and slowing in China, are very strong and accelerating.
Other details show a slight destocking in inventories which is welcome and points to the need for future orders in order to replenish inventories. Prices paid do remain elevated which is a negative for manufacturers. But overall, this report points to accelerating conditions and perhaps new leadership for the manufacturing sector, leadership that however will have to be confirmed by hard government data. The Dow is moving to opening highs following today's report.
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Market Consensus before announcement
The composite index from the ISM manufacturing survey in March rose one full point to 53.4, notably above of 50 to indicate monthly growth and slightly above February to indicate an increasing rate of growth. New orders, the most important detail in the report, softened very slightly to a still respectable 54.5 which is four tenths below February.
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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
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![[Chart]](showimage.asp?imageid=22446)
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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.
Data Source: Haver Analytics
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