ISM Better Than Expected, But Industry Commentary Was Worrisome

The Institute of Supply Management’s Purchasing Manager Index came in above expectations at 55.7 vs. an expected value of 53.4. While indeed most industries are growing, we believe the report actually has a few red flags found in the anecdotes highlighted from industry respondents.

Still, the Employment Index, which flipped to growth from contraction will be encouraging for job seekers. The latest is also the best we’ve seen this year. Yet perhaps we’re seeing the benefits of stimulus, which then could wear-off, in turn explaining some of the negative industry commentary below.



In October, 13 of the 18 manufacturing industries reported growth. The industries — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Furniture & Related Products; Chemical Products; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Paper Products. The three industries reporting contraction in October are: Nonmetallic Mineral Products; Primary Metals; and Wood Products.


“We are beginning to be affected greatly by lead-time increases on semiconductor components.” (Computer & Electronic Products)

“Still a very difficult environment — commodity increases threaten recovery and don’t seem to correlate with any supply/demand fundamentals.”(Food, Beverage & Tobacco Products) [Emphasis added]

“Automotive demand still remains strong even after ‘cash for clunkers.'” (Fabricated Metal Products) [indicated for the second month]

“After several rather busy months, we are seeing the order intake for early next year soften.” (Transportation Equipment) [Emphasis added]

“The improvement seen earlier is not holding.” (Primary Metals) [Emphasis added]


Read the full release here.

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