There was no 60+ ISM print as the whisper number had expected. November ISM came at 56.6 on expectations of 56.5, lower than October's 56.9. Surprisingly, three key categories declined: New Order came at 56.6 vs 58.9 prior, Employment dropped from 57.7 to 57.5, while production plunged from 62.7 to 55.0. Not surprisingly, inventories continued expanding. Exports declined and imports rose: a negative for GDP but who cares: after all the government will pull out whatever GDP number suits it. And probably the most telling admission by respondents is that the margin crunch will lead to higher prices, as expected: "Business continues to improve; however, rising material prices are eroding margin. Increases to the consumer are inevitable in early Q1 2011."
Complete respondent perspectives:
- "Business continues to improve; however, rising material prices are eroding margin. Increases to the consumer are inevitable in early Q1 2011." (Paper Products)
- "International markets expanding rapidly. Domestic market is slowly rebounding." (Transportation Equipment)
- "We're starting to see capacity at suppliers become an issue." (Machinery)
- "Capital projects are being released, which is improving our sales." (Computer & Electronic Products)
- "We are seeing increases in chemical prices that seem to be driven by supply/demand imbalance." (Chemical Products)
And further on the dropping margin theme, here are the commodities rising/dropping in price:
COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price
Aluminum (3); Caustic Soda (4); Chemicals (2); Copper (4); Copper Based Products; Corn (3); Corrugated Containers (9); Nickel; Plastic Resins; Polyethylene (3); Resins; Soybean Oil; Stainless Steel; Steel* (3); Titanium; and Titanium Dioxide.
Commodities Down in Price
Natural Gas; and Steel*.