According to the Manufacturing ISM Report On Business issued today by The Institute for Supply Management (ISM), the Purchasing Managers' Index (PMI) was at 50.7 up from 48.4 in December and 50 in November. Forecasters had expected the January index to fall to 47.0.
The index explains about 60% of the annual variation in GDP in the last 10 years. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. This earlier post goes into more detail.
In January, PMI was impacted the most by Production which was up 6.6% and then by New Orders which was up by 2.6%. The prices index went up 8 points in January “ indicating manufacturers are paying significantly higher prices on average when compared to December.” The Exports Orders index increased by 6 points marking the 62nd consecutive month of growth.
Like last month, there are inflationary concerns in some of the respondent’s comments:
"We are in a squeeze between supplier pressure to raise prices and customer pressure to reduce prices." (Chemical Products)
"The softness in residential construction has begun to manifest itself in commercial construction." (Machinery)
"Commodity prices continue to trade at all-time highs." (Food, Beverage & Tobacco Products)
The U.S. Department of Commerce recently completed its annual adjustment to the seasonal factors used in the monthly ISM Report starting with January 2008’s numbers (reported 2/1/08). Also starting this month, PMI will give equal weight to the five components of PMI. This affected PMI numbers going back to 2000. Before, they used these weights: New Orders, 30%; Production, 25%; Employment, 20%; Supplier Deliveries, 15%; and Inventories, 10%. Here is a chart showing the nominal differences between the new adjusted numbers and the old ones.
Sphere: Related Content
No comments:
Post a Comment