The January 2010 ISM for manufacturing was released today and PMI was in at 58.4%. Even employment plans are above 50 and had a 3.1% change. A value above 50 in the ISM means growth.
I think this is the first indicator above December 2007 levels, the official start of this recession, so this is a very good, sign of life report.
| MANUFACTURING AT A GLANCE JANUARY 2010 | ||||||
|---|---|---|---|---|---|---|
|
Index |
Series Index Jan. |
Series Index Dec. |
% Pt Chg. |
Dir. |
Rate of Change |
Trend* (Mon.) |
| PMI | 58.4 | 54.9 | +3.5 | Growing | Faster | 6 |
| New Orders | 65.9 | 64.8 | +1.1 | Growing | Faster | 7 |
| Production | 66.2 | 59.7 | +6.5 | Growing | Faster | 8 |
| Employment | 53.3 | 50.2 | +3.1 | Growing | Faster | 2 |
| Supplier Deliveries | 60.1 | 56.8 | +3.3 | Slowing | Faster | 8 |
| Inventories | 46.5 | 43.0 | +3.5 | Contracting | Slower | 45 |
| Customers' Inventories | 32.0 | 35.0 | -3.0 | Too Low | Faster | 10 |
| Prices | 70.0 | 61.5 | +8.5 | Increasing | Faster | 7 |
| Backlog of Orders | 56.0 | 50.0 | +6.0 | Growing | From Unchanged | 1 |
| Exports | 58.5 | 54.5 | +4.0 | Growing | Faster | 7 |
| Imports | 56.5 | 55.0 | +1.5 | Growing | Faster | 5 |
| OVERALL ECONOMY | Growing | Faster | 9 | |||
| Manufacturing Sector | Growing | Faster | 6 | |||
Primary Metals doesn't believe they will have an upturn until Q3 2010 and commodity prices are increasing.
The employment reading is at it's highest since April, 2006.
New orders was is now way above the start of the this recession.
Here is the ISM inventory index but it's not showing an important aspect to the picture. Customer's inventories are bare bones, which may imply some future orders and new hires.
The ISM Customers' Inventories Index registered 32 percent in January, 3 percentage points lower than in December when the index registered 35 percent, and the lowest reading in the history of the index. The index indicates that respondents believe their customers' inventories are too low at this time. This is the 10th consecutive month the Customers' Inventories Index has been below 50 percent.
Is manufacturing investing? On capital expenditures, a slight improvement:
Average commitment lead time for Capital Expenditures increased 8 days to 118 days. Average lead time for Production Materials increased 2 days to 53 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies was unchanged at 21 days.
Bear in mind manufacturing took a very heavy hit and has been for some time, so while this report is fantastic news, one needs to look at the scale of the losses for U.S. manufacturing. See this post for some rattling statistics on U.S. manufacturing since 2000.
FYI
As of 2008, Manufacturing sector contributed 11.5% to GDP. FIRE (Finance, insurance and real estate): 20%
Guess what it was in 1980:
Manufacturing sector: 20%
FIRE: 15.9%
They clearly moved in opposite directions. Just saying.
BEA: Value Added by Industry as a Percentage of Gross Domestic Product
RebelCapitalist.com - Financial Information for the Rest of Us.
RebelCapitalist.com - Financial Information for the Rest of Us.
good thing to amplify
in the "Buy American and Hire America" post here are more statistics but your point is something to pound on. Like the decline in the slope, or rate of change in job losses, looking at relative levels month to month and amplifying that misses the big picture....
This is a trough that U.S. manufacturing is coming out of and the truth is we have shipped our manufacturing to China and ships our jobs in other areas to India. (I guess I'll need to try to estimate the actual numbers in yet another post, but that about sums up the situation).
So, even though these relative numbers are great news...
comparing troughs to bleak is what we're doing here....
we need U.S. manufacturing to return to 20% of overall GDP.
Manufacturing has bottomed
If I was to make a guess, I would say that a decade of dollar devaluations has made our exports competitive everywhere except in east Asia.
Considering the size of budget deficits we'll be seeing, it doesn't appear that this will change any time soon unless the Euro melts down.
Economics Blog - Lots of References
For students or researchers: I have just added a Reference List to my economics blog with economic data series, history, bibliographies etc. for students & researchers. Currently 100+ meta sources, it will in the next days grow to over a thousand. Check it out and if you miss something, feel free to leave a comment.