Will there be a another expectations-beating ISM report in the US on Friday?
The August PMI report was surprisingly healthy, though it also followed two months of declines and was almost exactly at the median and mean of the prior twelve months. And the welcome increase in its employment component was obscured by that same day’s ADP report, which indicated that manufacturing jobs had contracted in the month.
The August numbers also came after a series of negative manufacturing surveys from regional Fed offices, and as Calculated Risk has wondered now and again, it seemed as if either the Fed surveys would soon improve or the ISM numbers would start to decline. Or maybe, like the rest of the economy, they’ll both just remain stagnant for a while.
Several Fed surveys, plus Thursday’s Chicago National Activity Index, have been released this week, and the results are somewhat mixed. The Kansas City and Dallas Fed each reported slight rebounds in September, though some individual components remained at low levels. The Richmond Fed reported a pullback after seven straight months of expansion, as “shipments and employment edged into negative territory.”
The manufacturing production component of the Chicago NAI reported that manufacturing production was flat in August, while manufacturing payrolls for the first time in eight months.
While on the plus side, the Fed’s Industrial Production Index has continued growing all year:
Hard to discern a directional trend from all this, we’re especially curious to see the updates to these two tables in Friday’s ISM:
| Inventories | % Higher |
% Same |
% Lower |
Net | Index |
|---|---|---|---|---|---|
| Aug 2010 | 19 | 68 | 13 | +6 | 51.4 |
| Jul 2010 | 19 | 60 | 21 | -2 | 50.2 |
| Jun 2010 | 13 | 66 | 21 | -8 | 45.8 |
| May 2010 | 13 | 66 | 21 | -8 | 45.6 |
| New Orders |
% Better |
% Same |
% Worse |
Net | Index |
|---|---|---|---|---|---|
| Aug 2010 | 29 | 49 | 22 | +7 | 53.1 |
| Jul 2010 | 27 | 53 | 20 | +7 | 53.5 |
| Jun 2010 | 36 | 50 | 14 | +22 | 58.5 |
| May 2010 | 50 | 38 | 12 | +38 | 65.7 |
While the inventories reading was climbing in the four months through the end of August, the new orders component was declining. If the pattern continues, at some point manufacturing activity will have to follow.
We’ll let you know.
Related links:
Breaking down the ISM numbers – FT Alphaville
Disembark the QE2 – FT Alphaville