Manufacturing ISM Drops To 53.6 From 55.7, Comes Below Expectations; Double-Dip Threat Looming
The Novermber manufacturing ISM dropped to a below expected 53.6, down both relative to October's 55.7, and to expectations of 55. Another 3.6 point drop and we are well on our way to a double dip, which is a certainty anyway once the administration stops subsidizing a major portion of the GDP.
From the report:
Economic activity in the manufacturing sector expanded in November for the fourth consecutive month, and the overall economy grew for the seventh 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. “The manufacturing sector grew for the fourth consecutive month in November. While the rate of growth slowed when compared to October, the signs are still encouraging for continuing growth as both new orders and production are still at very positive levels, and the Prices Index fell 10 points, signaling less inflationary pressure on manufacturers’ costs. Overall, the recovery in manufacturing is continuing, but many are still struggling based on their comments.”
PERFORMANCE BY INDUSTRY
In November, 12 of the 18 manufacturing industries reported growth. The industries — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Paper Products; Fabricated Metal Products; and Machinery. The five industries reporting contraction in November are: Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Primary Metals; and Plastics & Rubber Products.
WHAT RESPONDENTS ARE SAYING …
- “Becoming concerned about the value of the U.S. dollar.” (Apparel, Leather & Allied Products)
- “Low value of the dollar driving commodity costs higher.” (Food, Beverage & Tobacco Products)
- “Demand from automotive manufacturers remains strong and building.” (Fabricated Metal Products)
- “Capital construction seems to be picking up, and we are seeing more jobs that are bid out.” (Electrical Equipment, Appliances & Components)
- “Steady increase in business.” (Primary Metals)
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum (5); Copper (6); Copper Based Products (5); Natural Gas (2); Oil; and Steel (5).
Commodities Down in Price
No commodities are reported down in price.
Commodities in Short Supply
Electronic Components is the only commodity reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
NOVEMBER 2009 MANUFACTURING INDEX SUMMARIES
Manufacturing growth decelerated in November as the PMI registered 53.6 percent, a decrease of 2.1 percentage points when compared to October’s reading of 55.7 percent. This continues the recovery in the sector, but at a slower rate of growth. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the seventh consecutive month in the overall economy, as well as expansion in the manufacturing sector for the fourth consecutive month. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (45.4 percent) corresponds to a 1.3 percent increase in real gross domestic product (GDP). However, if the PMI for November (53.6 percent) is annualized, it corresponds to a 3.9 percent increase in real GDP annually."