December 1, 2017

November 2017 ISM Manufacturing: 58.2 Percent, Down from 58.7 Percent in October

Filed under: Economy — Tom @ 10:18 am

We’re going to try to stay more current on economic reports from this point forward, and the first step is to look at this morning’s Manufacturing Index from the Institute for Supply Management.

Predictions are for 58.4 percent, down very slightly from 58.7 percent in October.

HERE’S THE REPORT just released (paragraph breaks added by me; bolds are mine:

Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 102nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The November PMI® registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. The New Orders Index registered 64 percent, an increase of 0.6 percentage point from the October reading of 63.4 percent. The Production Index registered 63.9 percent, a 2.9 percentage point increase compared to the October reading of 61 percent.

The Employment Index registered 59.7 percent, a decrease of 0.1 percentage point from the October reading of 59.8 percent. The Supplier Deliveries Index registered 56.5 percent, a 4.9 percentage point decrease from the October reading of 61.4 percent. The Inventories Index registered 47 percent, a decrease of 1 percentage point from the October reading of 48 percent.

The Prices Index registered 65.5 percent in November, a 3 percentage point decrease from the October level of 68.5, indicating higher raw materials prices for the 21st consecutive month.

Comments from the panel reflect expanding business conditions, with New Orders and Production leading gains, employment expanding at a slower rate, order backlogs stable and expanding, and export orders all continuing to grow in November. Supplier deliveries continued to slow (improving), but at slower rates, and inventories continued to contract during the period. Price increases continued, but at a slower rate. The Customers’ Inventories Index improved but remains at low levels.”

Of the 18 manufacturing industries, 14 reported growth in November, in the following order: Paper Products; Machinery; Transportation Equipment; Computer & Electronic Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; and Primary Metals. Two industries reported contraction during the period: Wood Products; and Petroleum & Coal Products.

I’d say the good news clearly outweighs the bad news here, with New Orders and Production both at or almost touching 64 percent. The guess here is that this is the first time we’ve seen this combination of high values in at least 11 years. I’d start worrying about overheating and inflation if these 64 percent figures continue for several months. Backlog of Orders, the other GDP driver which is not mentioned in the ISM’s narrative, was unchanged at 55.0 percent, which is a decent enough level in historical context.

Recall that a year ago, the November ISM Manufacturing Index was at 53.2 percent, up from 51.9 percent in October, 51.5 percent in September, and a contracting 49.4 percent in September.

This recitation of ISM readings, especially given the survey’s likely positive selection bias, demonstrates the fallacy promoted by those who want to claim that Barack Obama gave Donald Trump an economy with meaningful momentum.

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3 Comments

  1. [...] Manufacturing Index dipped a bit to 58.2 percent from the 58.7 percent seen in October. But if Non-Manufacturing somewhat manages another increase, [...]

    Pingback by BizzyBlog — December 4, 2017 @ 2:35 pm

  2. [...] eh.  The economy today is on track to post its third straight quarter of over 3% growth. These jokers are as good at forecasting as economist Paul Krugman, who told us [...]

    Pingback by "It's The Economy, Stup - . . . oh" - Bookworm Room — December 6, 2017 @ 9:35 pm

  3. [...] eh? The economy today is on track to post its third straight quarter of over 3% growth. These jokers are as good at forecasting as economist Paul Krugman, who told us [...]

    Pingback by "It's The Economy, Stup -- . . . oh." — December 6, 2017 @ 10:42 pm

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