Seconds ago, the Institute of Supply Management (ISM) corrected the headline number of its manufacturing index to 55.4 against a previously corrected reading for 56.0.
To be clear, this is the second correction today.
At 10:00 a.m., ISM said the index fell to 53.2 in May from 54.9 in April.
And then just before 11:30 a.m., ISM’s Bradley Holcomb (according to Bloomberg’s Carlos Torres) said “There was a software error that applied last month’s seasonal adjustment factor to the new data.” At that time, ISM said the correct May number was 56.0
And now they’re saying it’s actually 55.4.
Following the second revised print, Ian Shepherdson said, “Amateur hour at the ISM strikes again.”
“The headline has now been corrected twice; first to 56.0 from 53.2, and now to 55.4. The new and, perhaps, final, numbers show orders up 1.8 points while production leaped 5.3 points to a five-month high of 61.0. But supplier deliveries, the order backlog and employment are still reported down from April. ISM orders now look elevated relative to the signal from China’s PMI, perhaps because domestic U.S. demand is strengthening. Either way, we expect seasonal distortions – as opposed to spreadsheet gremlins – to lift the index further in H2.”
Shortly after the 10:00 a.m. report, research firm Stone & McCarthy tweeted that it believed ISM used the wrong seasonal adjustment, and as a result, the headline May ISM reading was incorrect.
Bloomberg’s Vonnie Quinn was the first to report that ISM was correcting its report.
On its Twitter page, Stone & McCarthy has replied to users confirming they are the source of rumours regarding an incorrect ISM print.
Earlier today, Markit’s May manufacturing PMI came in at a three-month high of 56.4, up from 55.4 in April. Along with that report, Markit’s Chris Williamson said, “With the exception of a brief spell in early-2010, output is growing at the fastest rate seen since prior to the financial crisis.”
Some economists were a bit baffled by the conflicting Markit and ISM reports.
“The unexpected decline in the US ISM manufacturing index to a three-month low of 53.2 in May, from 54.9, contrasts with the improvement in the regional activity surveys and the national Markit PMI,” said Capital Economics’ Amna Asaf. “Even global manufacturing activity has been gradually improving. All this suggests that the ISM index will rebound in June.”
It seems Asaf’s rebound came much earlier than expected.
We’ve reached out to ISM for comment, and this post will be updated as we learn more.