Updated: 01-Mar-10 10:33 ET
| February ISM Index |
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| Updated: 01-Mar-10 10:33 ET |
Highlights
- Growth in the manufacturing sector slowed according to the latest ISM report. The ISM index fell from 58.4 in January to 56.5 in February.
- The consensus expected the index to fall, but only to 58.0.
Key Factors
- Production and new orders slowed significantly in February as the production index fell from 66.2 to 58.4 while the new orders index declined from 65.9 to 59.5.
- Inventories inched closer to the 50.0 threshold as the index rose to 47.3 from 46.5. However, customer inventories are still declining at a rapid pace as the index is still well below 50 at 37.0.
- Employment is gaining strength as the index remained above 50.0 for the third consecutive month. The index increased from 53.3 to 56.1 and is now at its highest level since January 2005.
Big Picture
- This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
| Category | FEB | JAN | DEC | NOV | OCT |
| Total Index | 56.5 | 58.4 | 54.9 | 53.7 | 55.2 |
| Orders | 59.5 | 65.9 | 64.8 | 61.5 | 58.3 |
| Production | 58.4 | 66.2 | 59.7 | 60.2 | 62.2 |
| Employment | 56.1 | 53.3 | 50.2 | 49.6 | 51.8 |
| Deliveries | 61.1 | 60.1 | 56.8 | 55.7 | 56.3 |
| Inventories | 47.3 | 46.5 | 43.0 | 41.4 | 47.3 |
| Export Orders | 56.5 | 58.5 | 50.2 | 56.0 | 55.5 |
| Prices paid (not seas adj) | 67.0 | 70.0 | 61.5 | 55.0 | 65.0 |
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