Thursday, December 1, 2011

ISM Manufacturing 52.7 vs Expectations of 51.5

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Europe's manufacturing data continued to weaken (no surprise as we had flash numbers last week that painted a weakening situation), following the path of what we saw in China.
  • The final euro zone manufacturing PMI was confirmed at 46.4, its weakest level in two years, with factory activity in both of its biggest economies, Germany and France, weakening. The German PMI Manufacturing fell to 47.9 points in November from 49.1.  The UK factory PMI fell to 47.6 in November, its lowest since June 2009.

In the U.S., ISM Manufacturing was just released and came in a bit better than expected (52.7 v 51.5) and still expansionary (over 50) - as always the U.S. is now predominantly a services economy so the ISM Services report is more reflective of what is happening in the country, but today's number seems to get more of the attention.   New orders 56.7 vs 52.4.  (good) Employment 51.8 vs 53.5 (bad), Prices back up some: 45.0 v 41.0.  This remains consistent with a muddle through "meh" economy - steady for the course the past year or so.

Full report here.

"The PMI registered 52.7 percent, an increase of 1.9 percentage points from October's reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month. The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the second month of growth after three months of contraction. While the Prices Index, at 45 percent, increased 4 percentage points from the October reading of 41 percent, prices of raw materials continued to decrease (registering below 50 percent) for the second consecutive month. Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders."


  • "Business still holding its own. Some growth in margin now that some of the raw materials prices have abated. Oil is pushing $100 so that has not been favorable." (Chemical Products)
  • "Orders for the remaining two months have increased after an extended 'summer dip' in sales overall. We expect to finish the year approximately 10 percent above 2010." (Electrical Equipment, Appliances & Components)
  • "Seeing a slight slowdown in orders; could be related to the holidays." (Primary Metals)
  • "Material lead times are getting longer. Seems like no one is hiring. Trying to do twice the output with the same amount of people." (Food, Beverage & Tobacco Products)
  • "Japanese auto production has returned to 100 percent, and domestic manufacturing continues to increase." (Fabricated Metal Products)
  • "Oil exploration seems to be really picking up. Government is permitting again, so business is the busiest we've ever seen." (Computer & Electronic Products)
  • "The EPS ruling about higher fees for coal-generated electricity can have a huge, negative impact on our business if implemented in January 2012. We are at the peak of our seasonal demand push." (Plastics & Rubber Products)
  • "Thailand flood impacting our business. Honda and Toyota cut production forecasts, and we are chasing some components made in Thailand." (Transportation Equipment)
MANUFACTURING AT A GLANCE
NOVEMBER 2011


Index
Series
Index
Nov
Series
Index
Oct
Percentage
Point
Change


Direction
Rate
of
Change

Trend*
(Months)
PMI52.750.8+1.9GrowingFaster28
New Orders56.752.4+4.3GrowingFaster2
Production56.650.1+6.5GrowingFaster3
Employment51.853.5-1.7GrowingSlower26
Supplier Deliveries49.951.3-1.4FasterFrom Slowing1
Inventories48.346.7+1.6ContractingSlower2
Customers' Inventories50.043.5+6.5UnchangedFrom Too Low1
Prices45.041.0+4.0DecreasingSlower2
Backlog of Orders45.047.5-2.5ContractingFaster6
Exports52.050.0+2.0GrowingFrom Unchanged1
Imports49.049.5-0.5ContractingFaster2
OVERALL ECONOMYGrowingFaster30
Manufacturing SectorGrowingFaster28
*Number of months moving in current direction.

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