ISM Beats Expectations Despite Its First Drop In Seven Months

Tyler Durden's picture

After beating expectations for 6 months in a row, the whisper expectations for December's Manufacturing ISM was a small miss of the 56.8 consensus print. Instead, the US inventory build up in the quarter boosted the ISM for one more month with the headline print of 57.0 beating expectations modestly, if recording the first decline in seven months, down from November's 57.3. There was little surprise in the internals, which saw New Orders (64.2 vs 63.6), Employment (56.9 vs 56.5) and Prices Paid (53.5 vs 52.5) all rise modestly. The New Orders Index increased in December by 0.6 percentage point to 64.2 percent, which is its highest reading since April 2010. The Employment reading was the highest since June 2011. Like the Chicago PMI previously, inventories dipped into contraction territory, if not as violently as in Chicago, down from 50.5 to 47.0. Judging by the boost to the US economy from the government shutdown, perhaps Congress should close more often: like permanently?

From the report:

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 57 percent, the second highest reading for the year, just 0.3 percentage point below November's reading of 57.3 percent. The New Orders Index increased in December by 0.6 percentage point to 64.2 percent, which is its highest reading since April 2010 when it registered 65.1 percent. The Employment Index registered 56.9 percent, an increase of 0.4 percentage point compared to November's reading of 56.5 percent. December's employment reading is the highest since June 2011 when the Employment Index registered 59 percent. Comments from the panel generally reflect a solid final month of the year, capping off the second half of 2013, which was characterized by continuous growth and momentum in manufacturing."


Of the 18 manufacturing industries, 13 are reporting growth in December in the following order: Furniture & Related Products; Plastics & Rubber Products; Textile Mills; Apparel, Leather & Allied Products; Computer & Electronic Products; Paper Products; Transportation Equipment; Primary Metals; Fabricated Metal Products; Wood Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The four industries reporting contraction in December are: Nonmetallic Mineral Products; Machinery; Chemical Products; and Electrical Equipment, Appliances & Components.

The full breakdown:

The break down of commodities rising and falling in price?

Commodities Up in Price

  • #1 Busheling Scrap; Corrugated Packaging; Galvanized Steel; Methanol; Plastic Resins; Stainless Steel; Steel; Steel — HRPO; Steel — Hot Rolled (2); and Wood (2).

Commodities Down in Price

  • Aluminum (2); Brass; Corn Based Products (2); Fuel (2); Hydraulic Components; MRO Supplies; and Office Supplies.

No commodities were reported in short supply.

The respondents, "amazingly enough", were all bullish across the board:

  • "Amazingly enough, we are seeing meaningful increases in our sales in nearly all segments and regions." (Apparel, Leather & Allied Products)
  • "Largest backlog ever. Most orders waiting on customer approvals." (Fabricated Metal Products)
  • "Orders and price continue to be strong." (Paper Products)
  • "Continued government spending constraints keeping production volumes low." (Transportation Equipment)
  • "Good overall business conditions nationally and internationally." (Computer & Electronic Products)
  • "Markets are sound. We typically see a seasonal 4th quarter slowdown. However, this year … not so." (Wood Products)
  • "Very, very busy." (Furniture & Related Products)
  • "Sales are strong going into the holiday season." (Food, Beverage & Tobacco Products)
  • "Construction equipment market continues to be flat with some signs of improvement on the horizon." (Machinery)
  • "Business conditions remain stable to slightly improving." (Miscellaneous Manufacturing)

So a great opportunity for the Fed to taper its flow by another $10 billion perhaps. Incidentally judging by the stock market reaction to this better than expected news, that's exactly the concern...

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Sudden Debt's picture

I love expetations... NOW CRUSH THEM!!!!!

VD's picture

where could one vote for permanent closure of congress? u have one vote here.

Obchelli's picture


And No Fed is not going to lose control in forseeble future

NoDebt's picture

Good point. I'm just wondering.... how far into the future can you forsee, exactly?  My crystal ball's been getting pretty foggy the last few years.  Perhaps I could borrow yours for a while.  I have a feeling when the next crisis hits it's going to be out of the blue with little warning and from a direction nobody's expecting.

Sudden Debt's picture

next time you should wash your hands after eathing those vat hamburgers before you touch the crystal... just saying...

boogerbently's picture

Obamacare is a disaster. So look for improved "govt numbers" in ALL areas, leading into the elections, so the Dems can claim Saviour status.

VD's picture

new NSA blocking FireFox add-ons causing minor posting glitchez: apologies.

superflex's picture

You should be apologizing for that shitty blog you tried to publish or your personal attacks on Hedgeless Horseman.

Go have a hamburger.  You'll feel better.

Sudden Debt's picture

Of the 18 manufacturing industries, 13 are reporting growth in December in the following order: Furniture & Related Products; Plastics & Rubber Products....

rubbers... YOU FUCKERS!!

disabledvet's picture

the last of the "funny money phucks" are now leaving the station. production is being shut in massively now...and if you want the order you need to put 100 billion in the bank (or its gold or silver equivalent) to get the order fulfilled. tanker rates going through the roof is your "canary dying." these huge corporations will simply buy their own fleet of ships and charge the same rate...or a dollar lower i guess...for "their product."

gwar5's picture

The teachers unions also constantly telling the local PTAs that they are willing to meet or exceed any expectations that are low enough.


Dr. Engali's picture

Yay central planning! Print some moar bitch!

disabledvet's picture

this is the plan from the "crazy right wing" "tithing as State Policy." ah, yes..."the Austrian solution." don't think it's gonna happen. Hayek would laugh his balls off at these clowns putting his name on it actually.

Musashi Miyamoto's picture

We need an ISM for iPhone apps. This way the sheeple can have an index to follow. It isnt fair that statistics are so boring.

Rising Sun's picture



There's no fucking recovery.  Just banksters fucking around with cash and companies like GM making cars and parking them in farmers' fields  - this is often called channel stuffing, but the dealers can't stuff anymore.



Kreditanstalt's picture

Curiouser and curiouser...! 

WHO is buying and consuming all this supposedly-rising manufacturing output?  And what about PROFIT MARGINS?