Sunday, December 5, 2010

USA Manufacturing PMI Dips -0.3% in November (Chart) "Sector continued expanding for 16th consecutive month"


USA Manufacturing PMI (Purchasing Managers' Index) by the Institute for Supply Management

USA Manufacturing PMI Dips -0.3% in November

Official Statement by the Institute for Supply Management (Tempe, Arizona) - Economic activity in the manufacturing sector expanded in November for the 16th consecutive month, and the overall economy grew for the 19th 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 during November, with both new orders and production continuing to expand. With the PMI at 56.6 percent, November's rate of growth is the second fastest in the last six months. Exports and imports continue to support expansion in the sector. Prices moderated slightly during the month, but comments from the respondents express concerns with regard to pricing pressures. The list of commodities in short supply increased, though short supply items are not yet posing significant problems. Manufacturing continues to benefit from the recovery in autos, but those industries reliant upon housing continue to struggle."

Cycle History The current ISM Manufacturing PMI is up +24.1 and +74.2% from the Great Recession cyclical bottom of 32.5 in December 2008. The PMI is down -3.8 and -6.3% from the recent cyclical peak of 60.4 in April 2010. Therefore, the current PMI is closer to the cyclical peak than the trough. The PMI is a percentage - not a total. More about the PMI below the chart.

Trend The short-term trend has been mixed and basically even. The current PMI continues below the April 2010 peak and has decreased 5 out of the 7 subsequent months. The current PMI is below the 12-month moving average of 57.1 and has not exceeded for 5 consecutive months. The current PMI is above the 24-month and 36-month moving averages of 50.7 and 49.5, respectively. The 12-month moving average has leveled off and began to ascend, while the 24-month and 36-month moving averages continue ascending. (The 12-month, 24-month, and 36-month moving averages charts are not shown on this page).

ISM Monthly Manufacturing PMI (Chart) Below is a chart of the latest 36 months (3 years) of the Purchasing Managers' Index (PMI) from December 2007 through the latest month reported, November 2010. The PMI has been greater than 50, indicating USA manufacturing is expanding, since August 2009, for 16 consecutive months. As can be seen, the PMI bottomed in December 2008 at 32.5, ascended significantly through August 2009 to 52.8. The PMI then continued upwards to a peak of 60.4 in April 2010. There have been 5 monthly declines out of the latest 7 months. However, the PMI still indicates USA manufacturing is expanding, just at a slowing rate.

Commentary The November PMI of 56.6 and -0.3% decrease from October is slightly disappointing, but the USA manufacturing sector continues expanding. The 5 declines in 7 months keep the April 2010 cyclical peak of 60.4 out of reach.

About the PMI The ISM describes the PMI, the USA manufacturing metric as: 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 42 percent, over a period of time, generally indicates an expansion of the overall economy. The PMI is a composite of five indexes: New Orders, Production, Employment, Supplier Deliveries, and Inventories. 18 manufacturing industries are reported and represented in the PMI: Primary Metals; Apparel, Leather & Allied Products; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities. The five industries reporting contraction in August are: Furniture & Related Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Machinery.

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*Data courtesy of the Institute for Supply Management*

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