Manufacturing ISM Expands 12th Month, But Less Than Forecast

US Manufacturing as measured by the June 2013 Manufacturing ISM Report On Business® rose for the 12th month.

ISM at a Glance

Series Data	May Index	Apr Index	Percentage Point Change	Direction	Rate of Change	Trend (Months)
PMI™	53.2	54.9	-1.7	Growing	Slower	12
New Orders	53.3	55.1	-1.8	Growing	Slower	12
Production	55.2	55.7	-0.5	Growing	Slower	3
Employment	51.9	54.7	-2.8	Growing	Slower	11
Supplier Deliveries	52.5	55.9	-3.4	Slowing	Slower	12
Inventories	53.0	53.0	+0.0	Growing	Same	4
Customers' Inventories	46.5	42.0	+4.5	Too Low	Slower	30
Prices	60.0	56.5	+3.5	Increasing	Faster	10
Backlog of Orders	52.5	55.5	-3.0	Growing	Slower	4
Exports	56.5	57.0	-0.5	Growing	Slower	18
Imports	54.5	58.0	-3.5	Growing	Slower	16

ISM vs. Consensus

Bloomberg reports ...

Highlights

Growth rates, in contrast to Markit's report released earlier this morning, slowed in ISM's manufacturing sample, to a composite 53.2 vs April's 54.9. Employment growth slowed noticeably, to 51.9 from April's 54.7. Growth in new orders also slowed noticeably, to 53.3 from 55.1, as did growth in backlog orders, to 52.5 vs 55.5.

Supplier deliveries improved which is another sign of deceleration in activity. Production also slowed, but only slightly to 55.2. Inventory readings on net look a little heavy compared to April. Prices paid, in contrast to other signs of slowing, show a little pressure, at 60.0 vs 56.5.

Today's results from the manufacturing sector are mixed, with Markit showing definite acceleration and ISM showing definite deceleration. Together they probably point to little change for the manufacturing sector relative to April. The Dow is moving to opening lows in immediate reaction to the ISM report.

Market Consensus Before Announcement

The composite index from the ISM manufacturing survey for April rose 1.2 points to a better-than-expected level of 54.9. Employment, which has been very soft in this report, bounced 3.6 points higher to a respectable 54.7. New orders were at a solid 55.1, unchanged from March, with new export orders up 1.5 points to a very strong 57.0. Backlog orders were solid at 55.5. Production was little changed from March at 55.7-a still notably positive reading.

This lukewarm report suggests the weather related bounce is over and slower manufacturing growth resumes.

Addendum:

ISM issued this Correction Notice on Manufacturing

ISM ® has discovered an error in its software programming for calculating the May 2014 Manufacturing PMI ® that was released at 10 a.m. ET this morning. “We apologize for this error. We have recalculated and confirmed that the actual index indicates that the economy is accelerating ,” said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management ® (ISM ® ) Manufacturing Business Survey Committee. “Our research team is analyzing our internal processes to ensure that this doesn’t happen again,” he added. “The May PMI ® registered 55.4 percent, an increase of 0.5 percentage point from April’s reading of 54.9 percent, indicating expansion in manufacturing for the 12th consecutive month. The New Orders Index registered 56.9 percent, a n increase of 1.8 percentage points from the 55.1 percent reading in April, indicating growth in new orders for the 12th consecutive month. The Production Index registered 61.0 percent, 5.3 percentage point s above the April reading of 55.7 percent. Employment grew for the 11th consecutive month, registering 52.8 percent, a decrease of 1.9 percentage points below April’s reading of 5 4.7 percent. The Supplier Deliveries Index registered 53.2 percent, 2.7 percentage points below the April reading of 55.9 percent. Comments from the panel reflect generally steady growth, but note some areas of concern regarding raw materials pricing and supply tightness and shortages.”

In spite of the upgrade, ISM still came in below consensus, but this was a marginally better showing than originally posted.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com