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Manufacturing ISM Beats Expectations, Highest Since June

Submitted by Tyler Durden on 01/03/2012 11:16 -0400

The American ability to delay the lag with the rest of the world persists for one more month, as December's ISM printed just better than expectations, coming in at 53.9, on expectations of 53.5, and compared to 52.7 in November. This was the best manufacturing data since June. As it turns out in December virtually every single component of US manufacturing improved, even as Customer Inventories somehow declined contrary to what retailer data has been indicating, and even as Europe went further into its recessionary shell following the 5th consecutive month of PMI contraction, and China saw a dramatic drop in the trade balance. But why bother to debate the numbers: here they are: New Orders rose from 56.7 to 57.6, Employment rose from 56.5 to 59.9, and so on. From the PMI: "The PMI registered 53.9 percent, an increase of 1.2 percentage points from November's reading of 52.7 percent, indicating expansion in the manufacturing sector for the 29th consecutive month. The New Orders Index increased 0.9 percentage point from November to 57.6 percent, reflecting the third consecutive month of growth after three months of contraction. Prices of raw materials continued to decrease for the third consecutive month, with the Prices Index registering 47.5 percent, which is 2.5 percentage points higher than the November reading of 45 percent. Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month's survey." Oh well - the banks will need to get even more apocalyptic with their forecasts if they want the Fed to start printing as +250 DJIA up days will not help the cause.

Full data table:

Somehow we fail the reconcile the tabulated optimism with what the respondents are saying, but as we said, oh well:

"Slow Q4 — lots of destocking and inventory reduction going on." (Chemical Products)
"Business seems strong, but likely due to tax advantages of purchasing capital expense items." (Machinery)
"Our business is stable with a very good outlook for 2012." (Miscellaneous Manufacturing)
"Food prices seem to have peaked as demand is starting to wane." (Food, Beverage & Tobacco Products)
"All auto demand remains strong." (Fabricated Metal Products)
"Continued conservative hiring, with tight discretionary spending controls due to slower growth expectations for 2012, driven by Euro zone sovereign debt concerns and lack of viable U.S. legislative process through the 2012 election." (Computer & Electronic Products)
"Business beginning to slow down (seasonal), but will finish with a very strong year." (Plastics & Rubber Products)
"Business is steady today around the world." (Transportation Equipment)
"Market has definitely slowed in the last month, and is expected to remain so this month." (Wood Products)

- advertisements -

Tue, 01/03/2012 - 11:19 | 2028653 GeneMarchbanks

"Food prices seem to have peaked as demand is starting to wane." (Food, Beverage & Tobacco Products)

That doesn't seem right at all...

Tue, 01/03/2012 - 11:24 | 2028673 Mr Lennon Hendrix

Americans aren't eating their fourth meal anymore.

Tue, 01/03/2012 - 11:29 | 2028687 francis_sawyer

A SNAP card doesn't stretch your food dollar as far as it used to...

Tue, 01/03/2012 - 11:38 | 2028713 EscapeKey

According to the BLS, that's actually bullish, as more expensive food = less bought. Less food bought = more money for other purchases.

At least, that's how they justify oil products when their prices increase...

Tue, 01/03/2012 - 12:03 | 2028791 CPL

Sort of.

Last year a pound of medium ground beef/meat was under a buck.

This year a pound of ground meat is well and over $4.00 a pound.

Tue, 01/03/2012 - 11:30 | 2028691 JPM Hater001

I've even had to cut down to 2 naps.

Tue, 01/03/2012 - 12:03 | 2028795 CPL

How have you been coping with this? I'd write a letter to the editor.

Tue, 01/03/2012 - 12:06 | 2028802 pods

I am getting to the point where I might cut out second breakfast and hold off till 11sies.

pods

Tue, 01/03/2012 - 12:14 | 2028828 fuu

It's hard being a hobbit in the Fourth Age.

Tue, 01/03/2012 - 12:01 | 2028765 Zadok

Really? Here is data adjusted for inflation since 2005. It looks like the continuation of an existing trend.

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryMoM_4256_image...

http://i1140.photobucket.com/albums/n579/bearasaur/SupermktsMoM_15273_im...

Only if you use variable, value reducing US dollars, real value is something else.

Tue, 01/03/2012 - 11:58 | 2028780 Zadok

"All auto demand remains strong." (Fabricated Metal Products)"

Really? Wow! Tell me another one...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_22732_imag...

Tue, 01/03/2012 - 11:20 | 2028661 Dr. Engali

This market is going to price in two trillion worth of printing. When the fed finally does print this pig will roll over.

Tue, 01/03/2012 - 11:42 | 2028728 Ned Zeppelin

And yet the media continue to mark their territory with numerous sprays of data points arguing against first quarter QE. Hard to see any consensus on the rationale for printing (once you leave Bankster World).

Tue, 01/03/2012 - 11:21 | 2028664 RobotTrader

Probably a good time to buy some cyclicals that pay decent dividends.

Like Emerson Electric, which hasn't missed a dividend payment since 1947 and has increased its dividend every year for 54 years.

Sure beats being invested in FAZ and TZA, now making world record lows.

Tue, 01/03/2012 - 11:26 | 2028681 Mr Lennon Hendrix

Wow, never heard a line like that used before. Are you really trying to sell us stock right now?

Tue, 01/03/2012 - 11:30 | 2028692 francis_sawyer

He(she) was barking about the insatiable appetite for US Treasuries last week...

Tue, 01/03/2012 - 11:33 | 2028698 Max Fischer

You were right about gold and the stock market. Both up 2% today. I gotta agree with you about $2000 gold.... we'll have a 15K Dow, too.

Max Fischer, Civis Mundi

Tue, 01/03/2012 - 11:37 | 2028711 GeneMarchbanks

Is that your new thing now? To play off of yourself?

Tue, 01/03/2012 - 11:57 | 2028777 francis_sawyer

"Play offs?"

http://www.youtube.com/watch?v=U7fjDS0jKiE

Sat, 06/30/2012 - 17:50 | 2028756 fuu

How about HRL? They make the SPAM and the Jenny-O turkeys plus they have paid a divvy every quarter since 1928?

Tue, 01/03/2012 - 11:23 | 2028668 drivenZ

well, if you look at last year, ISM peaked in Feb and then proceeded to plummet the next few months. Are these numbers adjusted at all for the holiday effect?

Tue, 01/03/2012 - 11:25 | 2028678 dpr10

only adjusted for obama reelection ::)

Tue, 01/03/2012 - 11:29 | 2028669 firstdivision

Anyone compare the ISM to the Fed Survey's? I am quite curious as to how this lines up today.

*edit* NVM seems to have came in where it should have. http://2.bp.blogspot.com/-OltdFyjHvI0/TvyaPBFn89I/AAAAAAAALu4/J1Xex5EHFl0/s1600/ISMFedDec2011.jpg

Tue, 01/03/2012 - 11:23 | 2028670 Scirocco

Iran warns US not to move carrier back into Gulf

Hormuz fireworks in the pipe.

The Stennis crew must be starting to warm up :)

Tue, 01/03/2012 - 11:24 | 2028675 skepticCarl

Even my deadbeat brothers and sisters-in-law are finding jobs right now. It takes a growing economy to get those useless eaters employed.

Tue, 01/03/2012 - 12:05 | 2028799 Eally Ucked

And where they found teir employment, please?

Tue, 01/03/2012 - 11:33 | 2028677 HarryM

Has the Fed figured out how to place new orders?

New orders of what - domestic or foreign

Who are we selling to?

Imports up? LOL - I'm in the shipping transportation biz for 25+ years - Consensus among peers in the industry is that import volume for Dec is down significantly .

Wholesale Price to move containers from China almost half off due to increased capacity - lower demand.

Steamship lines are gasping for air.

B.S. B.S. B.S.

Tue, 01/03/2012 - 11:26 | 2028683 surf0766

And we know June was freakn excellent so this must be more excellent. Or most excellent.

NUTS!!

Tue, 01/03/2012 - 11:27 | 2028685 Rainman

Gold doesn't care.....up 32 fiatscos

Tue, 01/03/2012 - 11:31 | 2028695 Everybodys All ...

Does anyone trust the ISM numbers anymore? Reminds me more of the Natonial Assoc. of Realtors home sales anouncements.

Tue, 01/03/2012 - 11:36 | 2028709 oogs66

it is in their best interests to lie and make it seem better

Tue, 01/03/2012 - 11:33 | 2028697 oogs66

How many of the respondents hold stock or options in their companies? Isn't it in their best interest to lie?

Tue, 01/03/2012 - 11:40 | 2028723 firstdivision

We may be at June 2011 level, but still waaaay down from Jan 2011 levels.

Tue, 01/03/2012 - 11:43 | 2028729 orangedrinkandchips

Honestly, this Jeff Saut from Raymond James is hilarious. Much like 99.9% of the other people who try to predict this market he is the epitome of a broken record. I would give him a bit of slack if he were not resusing the same stuff day in-day out.

What else is he suppose to say?

BIG BIG BIG difference between what he says, thinks and does. 3 things that should align but rarely do.

His belief because of his job is that 4 things are ever expanding and never contract...

1.) the universe- ok, he is right there

2.) American's waist lines....wrong and a deadly thought

3.) the market.

4.) the tides

1 out of 4 things do expand and should expand....but the others ebb and flow as they should....

At what point do the majority of people just laugh at him and others who use the same word doc to predict the future?

Never ever ever has he had a warning or bad thought about the market which isnt right for a person who should be protecting his 'clients'.

I think what gets me (and everyone on this blessed site) is that this market is far far far from free and while I would love to go long and strong the charade is just that... a charade.

Much like any game or contest...IT IS SO HARD TO WALK AWAY ON TOP....it just goes against human reflexes....like tapping your knee and no reaction.

The most insidious thing is what these people really think inside - whether they live in denial or are outright devious is beside the point.

Groundhog day.....same shit, different year.

who's fault? mine. That much I know. Nobody to blame but myself.

Tue, 01/03/2012 - 11:43 | 2028730 Ned Zeppelin

I think this report must have been widely leaked.

Tue, 01/03/2012 - 11:43 | 2028731 orangedrinkandchips

What else is he suppose to say?

BIG BIG BIG difference between what he says, thinks and does. 3 things that should align but rarely do.

His belief because of his job is that 4 things are ever expanding and never contract...

1.) the universe- ok, he is right there

2.) American's waist lines....wrong and a deadly thought

3.) the market.

4.) the tides

1 out of 4 things do expand and should expand....but the others ebb and flow as they should....

At what point do the majority of people just laugh at him and others who use the same word doc to predict the future?

Never ever ever has he had a warning or bad thought about the market which isnt right for a person who should be protecting his 'clients'.

I think what gets me (and everyone on this blessed site) is that this market is far far far from free and while I would love to go long and strong the charade is just that... a charade.

Much like any game or contest...IT IS SO HARD TO WALK AWAY ON TOP....it just goes against human reflexes....like tapping your knee and no reaction.

The most insidious thing is what these people really think inside - whether they live in denial or are outright devious is beside the point.

Groundhog day.....same shit, different year.

who's fault? mine. That much I know. Nobody to blame but myself.

Tue, 01/03/2012 - 11:44 | 2028735 Fourth Horseman...

Fourth Horseman of the Apocalypse's picture

Everyone has forgotten that a major tax deduction for capital goods expired at the end of December. Thanks to the stimulus bill, businesses were allowed to deduct up to $500k of the cost of equipment. Starting January that drops to $125k and next year to $25k. For many small businesses, the capital goods are autos or light trucks and it is the expiration of the tax deduction (I believe) that is driving strong truck sales in 4Q. It is the outperformance of auto and truck sales that has drivent the Chicago PMI higher and that has driven the national PMI higher. But all this ends January 1st....

Tue, 01/03/2012 - 15:09 | 2029713 MachoMan

Anecdotally, heard of a guy who bought 4 heavy duty trucks here in the last week of December for this very reason...

Practically speaking, I'm not sure why we allow the expensing of capital purchases with long useful lives... I think they should more accurately be depreciated... like everything else. Consistency and all...

Tue, 01/03/2012 - 11:44 | 2028736 Fourth Horseman...

Tue, 01/03/2012 - 11:48 | 2028750 Zadok

While I appreciate articles depicting accurate assessments, anything denominated in a variable value indicator (like the US Dollar) needs a bit more to fully appreciate what has been done.

Here are my own ones rooted out from the data published by the Census.

Anything that does not account for the currency dilution via 'printing' using inflation calculation is interesting but functionally useless for concrete decision making.

This provides data for making accurate decisions.

http://i1140.photobucket.com/albums/n579/bearasaur/RetailSalesMoM_4256_i...

http://i1140.photobucket.com/albums/n579/bearasaur/SupermktsMoM_15273_im...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryMoM_4256_image...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_29680_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_31758_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_28180_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_5846_image...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_26456_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_24614_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_22732_imag...

http://i1140.photobucket.com/albums/n579/bearasaur/GroceryYoY_624_image0...