The Institute of Supply Management (ISM) once again announced the results of their monthly Purchasing Managers Index (PMI) and once again the results fly in face of my economic thesis. The latest results are shown below.
This was undoubtedly a good report. The PMI gained a half point on the month, primarily on higher inventory levels. New orders fell nearly 3 points but remain strong at 60.5. This is while the supply chain stock, as evidenced by the customer inventory index, moved more towards a more normal measure.
The monthly PMI continues to fly in face of my thesis for recessionary and to stall-speed economic conditions. That said, I surmise much of the gains, provided the limited respondent comments, are derived from housing and auto-related activity, which in turn have been artificially boosted by the Fed's QE efforts. That said, one indicator I have watch for some time is the spread between US and global manufacturing activity. Excluding the US, global manufacturing activity appears to have contracted in September, comparatively to the robust growth stateside. The following chart shows the global PMI measures excluding the equivalent US results versus the US PMI.
That is one wide gap in activity and historically the US results have tended to converge on global manufacturing activity.
| MANUFACTURING AT A GLANCE SEPTEMBER 2013 |
||||||
|---|---|---|---|---|---|---|
Index |
Series Index Sep |
Series Index Aug |
Percentage Point Change |
Direction |
Rate of Change |
Trend* (Months) |
| PMI™ | 56.2 | 55.7 | +0.5 | Growing | Faster | 4 |
| New Orders | 60.5 | 63.2 | -2.7 | Growing | Slower | 4 |
| Production | 62.6 | 62.4 | +0.2 | Growing | Faster | 4 |
| Employment | 55.4 | 53.3 | +2.1 | Growing | Faster | 3 |
| Supplier Deliveries | 52.6 | 52.3 | +0.3 | Slowing | Faster | 3 |
| Inventories | 50.0 | 47.5 | +2.5 | Unchanged | From Contracting | 1 |
| Customers' Inventories | 43.0 | 42.5 | +0.5 | Too Low | Slower | 22 |
| Prices | 56.5 | 54.0 | +2.5 | Increasing | Faster | 2 |
| Backlog of Orders | 49.5 | 46.5 | +3.0 | Contracting | Slower | 5 |
| Exports | 52.0 | 55.5 | -3.5 | Growing | Slower | 10 |
| Imports | 55.0 | 58.0 | -3.0 | Growing | Slower | 8 |
| OVERALL ECONOMY | Growing | Faster | 52 | |||
| Manufacturing Sector | Growing | Faster | 4 | |||
This was undoubtedly a good report. The PMI gained a half point on the month, primarily on higher inventory levels. New orders fell nearly 3 points but remain strong at 60.5. This is while the supply chain stock, as evidenced by the customer inventory index, moved more towards a more normal measure.
The monthly PMI continues to fly in face of my thesis for recessionary and to stall-speed economic conditions. That said, I surmise much of the gains, provided the limited respondent comments, are derived from housing and auto-related activity, which in turn have been artificially boosted by the Fed's QE efforts. That said, one indicator I have watch for some time is the spread between US and global manufacturing activity. Excluding the US, global manufacturing activity appears to have contracted in September, comparatively to the robust growth stateside. The following chart shows the global PMI measures excluding the equivalent US results versus the US PMI.
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