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ISM Manufacturing Comes At 55.5, Lowest Since December 2009, Better Than Expectations

Tyler Durden's picture





 

The PMI came in at 55.5, a smidge better than expectations of 54.5, yet worse than June's 56.2, and the lowest since December 2009, yet expectations set by a roundtable of Ph.D.'s are all that matters. Among the various indices, New Orders came in at 53.5 versus 58.5, the lowest since Junr 2009, while both Employment and Prices Paid came in better than before at 58.6 and 57.5 respectively. Deterioration was also spotted in Production, Backlog of Orders, and Imports. Yet this seemingly "better than expected" report was overshadowed by the sampling of negative responses:"Business in July was strong, the best month since October 2008." [don't tell this to Arcelor-Mittal] (Fabricated Metal Products), "Slow economy has killed sales for new equipment orders." (Machinery),"Quoting activity and sales are slow, and backlog is dropping." (Computer & Electronic Products),"Business continues to be sluggish and has fallen slightly as the economic ills continue." (Nonmetallic Mineral Products),"Retailers are still unwilling to gamble on inventory." (Printing & Related Support Activities).

Full press release:

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in July for the 12th consecutive month, and the overall economy grew for the 15th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair
of the Institute for Supply Management™ Manufacturing Business Survey
Committee. "Manufacturing continued to grow during July, but at a
slightly slower rate than in June. Employment, supplier deliveries and
inventories improved during the month and reduced the impact of a
month-over-month deceleration in new orders and production. July marks
12 consecutive months of growth in manufacturing, and indications are
that demand is still quite strong in 10 of 18 industries. The prices
that manufacturers paid for their inputs were slightly higher but
stable, with only a few items on the short supply list."

PERFORMANCE BY INDUSTRY

Ten of the 18 manufacturing industries are reporting growth in July,
in the following order: Plastics & Rubber Products; Miscellaneous
Manufacturing; Paper Products; Electrical Equipment, Appliances &
Components; Transportation Equipment; Primary Metals; Textile Mills;
Computer & Electronic Products; Fabricated Metal Products; and
Chemical Products. The four industries reporting contraction in July
are: Nonmetallic Mineral Products; Furniture & Related Products;
Food, Beverage & Tobacco Products; and Machinery.

WHAT RESPONDENTS ARE SAYING...
  • "Business in July was strong, the best month since October 2008." (Fabricated Metal Products)
  • "Slow economy has killed sales for new equipment orders." (Machinery)
  • "Quoting activity and sales are slow, and backlog is dropping." (Computer & Electronic Products)
  • "Business continues to be sluggish and has fallen slightly as the economic ills continue." (Nonmetallic Mineral Products)
  • "Retailers are still unwilling to gamble on inventory." (Printing & Related Support Activities)
MANUFACTURING AT A GLANCE
JULY 2010

Index

Series
Index
July
Series
Index
June
Percentage
Point
Change

Direction

Rate
of
Change
Trend*
(Months)
PMI 55.5 56.2 -0.7 Growing Slower 12
New Orders 53.5 58.5 -5.0 Growing Slower 13
Production 57.0 61.4 -4.4 Growing Slower 14
Employment 58.6 57.8 +0.8 Growing Faster 8
Supplier Deliveries 58.3 57.3 +1.0 Slowing Faster 14
Inventories 50.2 45.8 +4.4 Growing From Contracting 1
Customers' Inventories 39.0 38.0 +1.0 Too Low Slower 16
Prices 57.5 57.0 +0.5 Increasing Faster 13
Backlog of Orders 54.5 57.0 -2.5 Growing Slower 7
Exports 56.5 56.0 +0.5 Growing Faster 13
Imports 52.5 56.5 -4.0 Growing Slower 11
             
OVERALL ECONOMY Growing Slower 15
Manufacturing Sector Growing Slower 12

*Number of months moving in current direction

 

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Capacitors; Corrugated Containers (5); Paper; Pulp; Steel* (13); and Titanium.

Commodities Down in Price

Machined Steel Parts; Polyethylene, Polypropylene Resins (2); and Steel*.

Commodities in Short Supply

Capacitors; Electrical Components; and Titanium Dioxide.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

 


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Mon, 08/02/2010 - 10:28 | Link to Comment Robslob
Robslob's picture

Rally...this must mean more stimulus!

Mon, 08/02/2010 - 10:40 | Link to Comment Mojo
Mojo's picture

SP500 up almost 2%. Almost everything is up. Panic buying. WOW.

Mon, 08/02/2010 - 14:29 | Link to Comment Battleaxe
Battleaxe's picture

Yes...if the markets are rallying then everyone must know something I don't. QE2 must be on its way! Oh joy! I better jump on this bandwagon now before it's too late! Thank God for QE2! It's most definitely a foregone conclusion at this point.

(or will the Fed just be flashing around its QE2 bullet for an "extended period" because its the last bullet it has?)

Mon, 08/02/2010 - 10:33 | Link to Comment Boilermaker
Boilermaker's picture

That's gotta be good for a 180+ point shove upward on the DOW.  It's just gotta be.

Mon, 08/02/2010 - 10:36 | Link to Comment johngaltfla
johngaltfla's picture

It's going to be fun watching the equity honks promoting this while the bond market yawns.

For those who are perpetually cheering today's rise of the S&P 500 above the 200 DMA, I would just remind them that it did this one other time recently after a "Death Cross"....May 2008.

Gee, whatever happened after May of  08...hmmm....

Mon, 08/02/2010 - 11:18 | Link to Comment Village Idiot
Village Idiot's picture

For those who are perpetually cheering today's rise of the S&P 500 above the 200 DMA, I would just remind them that it did this one other time recently after a "Death Cross"....May 2008.

 

Funny (not so much). I was very dumb money in 2008.  I was told by a friend who had been bearish for some time that the 25 and 50 crossed over the 200.  I brought this to the attention of my "advisor".  His reply - "Technical analisys is worthless, it's all about fundamentals." The rest... is history. 

Mon, 08/02/2010 - 12:33 | Link to Comment johngaltfla
johngaltfla's picture

"Technical analisys is worthless, it's all about fundamentals."

Those are the same people that want permanent bans on all short sales. Of course what they don't realize is that while the shorts are on summer vacation, they are filling a huge air pocket in the markets with more air.

No volume.

No retail commitment.

No reality in some of the earnings.

No monetary velocity.

It's shaping up for one more really nasty August-September swoon if not outright implosion.

Mon, 08/02/2010 - 10:36 | Link to Comment old_turk
old_turk's picture

Any # above 50 is good ... although 55.5 should be about 65 with all the money the .gov is dropping from skynet.

That being said, the new orders fall off is indicative of abrupt slowing which should be trended over the next couple of quarters.  If that new orders metric goes below 50 ... all the rest will follow, in lock step.  2011 should be a doozy.

Mon, 08/02/2010 - 10:52 | Link to Comment firstdivision
firstdivision's picture

So does that mean the next report will be to the hundredths? 50.01 all is well, still expanding........don't mind M/M numbers...that is just semantics.

Mon, 08/02/2010 - 10:39 | Link to Comment wiskeyrunner
wiskeyrunner's picture

Price action is all that matters people. The price action says buy the dips. Get long and cost average in on any dip. Always you stops and money mannagment. The risk now is shorting these rallys. Thats the message from the markets.

 

IT'S ALL RIGGED TO THE UPSIDE.............. TILL NOVEMBER. MAKE FREE MONEY $$$$$

Mon, 08/02/2010 - 10:40 | Link to Comment Grandpa Bear Hug
Grandpa Bear Hug's picture

The equity market launches as it celebrates the fact that the ISM Index was lower than June and is the lowest reading of 2010. The S and P 500 rockets up 21+ points while the DOW living up to "no stock left behind" launches up 188+ points. The ISM Index is now officially below the reading for October 2009! Yes America a weakening economy is reason to celebrate.

ISM Index Recap

55.5 July 2010

56.2 June 2010

59.7 May 2010

60.4 April 2010

59.6 March 2010

56.5 February 2010

58.4 January 2010

55.9 December 2009

53.6 November 2009

55.7 October 2009

The Vigilant Grandpa needs the Kool-aid recipe

Mon, 08/02/2010 - 10:46 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I think Rosie was waiting for this one. Let's see what he has to say about it.  Very troublesome.  If you are a trader, it seems risk on until further notice, especially given all of this pre-QE 2.0 chatter at the highest levels. If you're like me, and worried about the big picture, this report bespeaks stagnation and slow to no growth, despite herculean printing press activity. The jobs report on Friday will be a snoozer too. No relief in sight.

Mon, 08/02/2010 - 10:47 | Link to Comment aint no fortuna...
aint no fortunate son's picture

Well, doesn't it matter that all those Ph.D's were from reputable universities?

Mon, 08/02/2010 - 10:56 | Link to Comment asteroids
asteroids's picture

Volume sucks. We know how this plays out. Sometime in the near future expect a 2% drop on massive volume on bad news somewhere in the world.

Mon, 08/02/2010 - 11:08 | Link to Comment Johnny Yuma
Johnny Yuma's picture

Agreed... This magic carpet ride will have to end soon. If you believe in gap fills, the ES now has 2 unfilled sizable gaps just waiting to be filled (7/22 - 13.75 points, today - 10 points). And it's not the amount of points the gaps are, it's the distance from where we are at today to 7/22's fill (around 54 points). Gaps don't always get filled but this is looking suspicious. 

Mon, 08/02/2010 - 10:57 | Link to Comment Boilermaker
Boilermaker's picture

Right, that's why volume is busting out...oh wait, it's sucking a massive dong today also.  How fucking wierd.

Mon, 08/02/2010 - 11:00 | Link to Comment Wyndtunnel
Wyndtunnel's picture

For the longest time I was flummoxed by what the Great Bearded One (as in JC not BB) meant by "The meek shall inherit the Earth".  It's starting to make more sense now...

Mon, 08/02/2010 - 11:02 | Link to Comment Village Idiot
Village Idiot's picture

 

Right, that's why volume is busting out...oh wait, it's sucking a massive dong today also.

 

poetic. ;-)

Mon, 08/02/2010 - 11:04 | Link to Comment n2dark
n2dark's picture

absolutely fantastic, although i suspect that after that many viagras a heart attack and/or stroke is probably overdue

Mon, 08/02/2010 - 11:08 | Link to Comment firstdivision
firstdivision's picture

Volume sucks b/c those afriad are not entering, and all the hedgies are either

a) on an island banging models (not the quant kind either) and doing lines while snorkeling

or

b) looking for a good shorting position.

They know the upsides are slow to climb and quick to fall. 

Mon, 08/02/2010 - 12:13 | Link to Comment daneskold
daneskold's picture

What do you mean upsides are "slow to climb?"

WTF did you see happen last Friday and today?

 

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