ISM Manufacturing Beats, Construction Spending Misses

Tyler Durden's picture

The first two economic indicators of 2013 are in and are a beat and a miss. The beat was in the December ISM Manufacturing printed at 50.7, higher than the 50.5 expected, and up from November's 49.5. This is happening even as 7 of the 18 manufacturing industries in December report growth while 9 reported contraction: go figure. Looking at the component data, New Orders remained flat at 50.3. The index was driven higher by Backlog of Orders +7.5, Exports +4.5, Supplier Deliveries +4.4, Employment +4.3, and Prices + 3.0. The declines were in Inventories and Production, down -2.0 and -1.1 respectively. The miss was in November Construction Spending, which printed at -0.3%, down from a downward revised October 0.7% (from 1.4%), and well below expectations of a 0.6% print: this was the biggest miss in 10 months, and the first negative print in 10 months, which however will likely be blamed on Sandy.


And Construction Spending:

The ISM table:

The funny stuff: 7 industries posting growth, 9 reporting contraction:

Of the 18 manufacturing industries, seven are reporting growth in December in the following order: Furniture & Related Products; Paper Products; Petroleum & Coal Products; Wood Products; Primary Metals; Computer & Electronic Products; and Food, Beverage & Tobacco Products. The nine industries reporting contraction in December — listed in order — are: Nonmetallic Mineral Products; Chemical Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; and Apparel, Leather & Allied Products.

And the always entertaining respondents:

  • "Many Chinese sources are coming to us with cost reductions to maintain their current business volumes." (Machinery)
  • "Saw some stronger than expected demand in October and November, but December demand is weak comparatively." (Food, Beverage & Tobacco Products)
  • "We are seeing stabilization of orders and costs as well as production capacity for the first time in months." (Miscellaneous Manufacturing)
  • "We are experiencing a mix of results — domestic up year over year for industrial business, down in retail and down in LATAM, EU and Asia. Next year is anyone's guess — has never been so unpredictable." (Apparel, Leather & Allied Products)
  • "Black Friday was good, but forward economic visibility is foggy." (Computer & Electronic Products)
  • "The election is over; unemployment is dropping; consumer confidence is increasing as are home sales prices. We seem to be turning the corner. New car sales are increasing, which affects our customers." (Fabricated Metal Products)
  • "Business conditions have flattened out since last month. Overall production has leveled off from their previous reduction last month." (Transportation Equipment)
  • "Business is strengthening." (Furniture & Related Products)
  • "Prices and orders are staying stronger than normal for December — a pleasant surprise." (Wood Products)
  • "Uncertainty in additional government regulations and tax climate seems to be slowing orders." (Chemical Products)

And so on.

Since the news came wrapped in a flashing red headline, the algos took the very mixed data and ramped stocks even higher.

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Cognitive Dissonance's picture

I liked the "Prices" increase from 52.5 to 55.5. Apparently so did Gold.

Jay Gould Esq.'s picture

Dr. Copper seems particularly pleased with the ISM print.

Copper + 3.7 %, as of this writing.

Cognitive Dissonance's picture

Thank God I bought that 1000 ft spool of 12/2 wire yesterday. :)

I can't wait until people start ripping out highway guardrails, roadside power lines and wiring in old abandoned homes. 

<Now you're SURE the power is off.....right?>

q99x2's picture

Blythe is buying up all the copper and starting an ETF to control the pricing per MK.

JPM Hater001's picture

I like that it was the 5th month trend and is increasing...faster

GMadScientist's picture

Hope your silly seasons sales were good's probably the last you'll see for a long time.

MFLTucson's picture

So backlog orders are positive for growth? This is just silly and anyone who reads this ISM report should shit in their pants, it’s another disaster as New orders are in the tank and you have a -9 % contraction . But, the charade by this disgusting group on Wall Street and in DC plays on for all you fool. Buy stocks and you will be wiped out in 6 months. No question in my mind

Shizzmoney's picture

I love that Fabricated Metal Products says this: "The election is over; unemployment is dropping; consumer confidence is increasing as are home sales prices. We seem to be turning the corner. New car sales are increasing, which affects our customers."


Gotta love the God of Irony.

Cognitive Dissonance's picture

Ben runs Fabricated Fiat Products aka The Fed.

withnmeans's picture

Sandy, Sandy, Sandy, a vicious gal, however if the Big Wall Street boys had any clue, they would know that disasters make construction and construction products go up. Henceforth, if the construction numbers are down then there is a real problem.

Between the Insurance companies and Big Government throwing vast amount of money in the Northeast, the construction numbers should be high.

Oh, don't forget who really pays for disasters, its the little people. Yes, our insurance will go up again, win - win for the insurance companies.  

Salon's picture

Just give up and go all in on double and triple bull ETF's.

If Ambrose Evans Pritchard is predicting a massive bull market (before hyperinflation or deflation later strikes) then risk is totally on

If republicans got rolled over a mild fiscal hill, then there is no way they will hold the line in two months on the debt limit.

SheepDog-One's picture

Gee more squiggly lines which mean absolutely nothing at all.

Cursive's picture

How do you have wood and paper products expanding and chemicals contracting?  These are all cyclical businesses.

Salon's picture

No complex systems have perfect correlation even if you choose to view chemicals and paper products under the primitive construct of "cyclical" industries.

If you are going to capitulate, capitulate early.

caimen garou's picture

the wood products are gun stocks and the paper is toilet paper and dollars

JPM Hater001's picture

The furniture bump was safes.

gaoptimize's picture

I'm sure PhD. Bernanke is disappointed that ~$100B/month in new money can't lift these indicators more than this.  It would be interesting to track private sector driven ISM and construction as a seperate component.

Tsar Pointless's picture


Equity markets are up. The only meaningful thing in this "ZIRP 4eva" world.

The memo was sent out in early 2009. Did you not yet get it?

Glass Seagull's picture

After Ben leaves the Fed, his book (because you know he's going to write one) will be titled:


Easy Money:  How I Made $200B Writing VIX Calls



ReptilianSlaveMaster's picture

Thanks to Bernanke and Obama you can get all the free drugs you want and collect benefits while playing call of duty on your fat ass, things could not be better so stop complainning take a few puffs and hit up the XBOX, you might enjoy it! 4 more yeara!

bigrooster's picture

The increase is due to guns and ammo sales surging...duh.  My channel checks show no .223/5.56/9mm ammo left in Phoenix.  

Long lead and brass!