Adam G. York, Economic Analyst
[email protected] ● 704-715-9660 February 02, 2009
ISM Manufacturing Index Moved Higher The ISM manufacturing index moved up to 35.6, off of a multi-decade low set in December. Key sub-indices including production and new orders both moved higher. Employment held at 29.9, which would suggest a 500,000 plus job loss is probable in Friday’s release. Manufacturing still contracted sharply, despite the increase. New Orders Jumped Up
Employment Flat, Prices Bounced Higher
• The headline index increased for the first time since June, but remains extremely depressed. New orders also jumped nearly ten points higher. While coming in better than expected, it is too early to celebrate. Manufacturing remains under considerable pressure and output will likely contract through at least the first half of the year.
• The employment index was unchanged in January at 29.9, a 26 year low. This extremely low reading suggests massive losses in manufacturing payrolls in data to be released on Friday. • The prices paid index bounced back higher, but most manufacturers continued to see lower input costs. Inflation is not the concern going forward; deflation may be.
ISM Manufacturing Composite Index
ISM Employment Index
Diffusion Index
Diffusion Index
65
65
65
60
60
60
60
55
55
55
55
50
50
50
50 45
45
45
45 40
40
35
35
65
40
40
35
ISM Composite Index: Jan @ 35.6 12-Month Moving Average: Jan @ 44.3
30 87
89
91
93
95
97
99
01
03
05
35
30
30
25 92
07
30
ISM Manufacturing Employment: Jan @ 29.9 ISM Manufacturing - 12 Month Moving Average: Jan @ 41.7 94
96
ISM New Orders Index
98
00
02
04
06
25 08
ISM Price Index
Diffusion Index
Diffusion Index
75
100
70
70
90
90
65
65
80
80
60
60
55
55
70
70
50
50
60
60
45
45
50
50
40
40
40
40
35
35
30
30
30
30
75
New Orders: Jan @ 33.2 ISM - 12 Month Moving Average: Jan @ 40.8
25 20 87
89
91
93
95
97
99
01
03
05
07
09
25
20
20
10
100
20
ISM Prices Index: Jan @ 29.0 12-Month Moving Average: Jan @ 62.5
10 92
94
96
98
00
02
04
06
08
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