ISM Surges, Prints At 56.9, Beats Expectations of 54, As Inventories Supposedly Decline Despite Contribution To Q3 Preliminary GDP Beat

Tyler Durden's picture

Major beat by the Chicago Manufacturing ISM, coming at 56.9, on expectations of 54, compared to 54.4 previous, and the highest since May 2010. Yet not all is rosy, as the majority of respondents still find conditions deteriorating: "The dollar is weakening again, which is resulting in higher costs
for our materials we purchase overseas. It is hurting our profit
margins";
"Currency continues to wreak havoc with commodity pricing"; "Customers remain cautious, placing orders at the last minute, making supply planning a challenge." Exports contribute substantially to resounding beat as somehow every country is now seeing surging exports to everyone else, and nobody admits to actually importing. Lastly, inventories, the key contributor to the Q3 preliminary GDP beat declined. Go figure. 

Key ISM Components, all better than prior:

  • New Orders: 58.9 vs. Prev. 51.1
  • Employment: 57.7 vs. Prev. 56.5
  • Prices Paid: 71 vs. Exp. 70.5 (Prev. 70.5)

Yet oddly enough, the main decline was in inventories, the same category that contributed to a major beat in Q3 preliminary GDP.

Here are what the respondents are saying:

  • "The dollar is weakening again, which is resulting in higher costs
    for our materials we purchase overseas. It is hurting our profit
    margins." (Transportation Equipment)
  • "Business slowing down but still double digit over last year." (Chemical Products)
  • "Currency continues to wreak havoc with commodity pricing." (Food, Beverage & Tobacco Products)
  • "Customers remain cautious, placing orders at the last minute, making supply planning a challenge." (Machinery)
  • "Our customer base — auto manufacturers — is expanding capacity and
    making major capital investments." (Fabricated Metal Products)

Full report.