Since bad news are great news, great news should be bad news, as all talk of QE2 on September 21 can now be shelved. It also means the sub-50 print will come in September instead of August, or October at the latest, unless all data analysis is outsourced to China in the next month. Reading through the components of the ISM, the report does not seem quite a strong as expected, with decline in New Orders, Backlogs, Exports and Deliveries, with a huge surge in Imports and Inventories pushing the overall number much higher. And the respondents commentary confirms that growth is being pulled exclusively from abroad: “Still experiencing intermittent delays in electronic components due to capacity and raw materials.” (Electrical Equipment, Appliances & Components); “International sales are especially strong. Domestic business is solid.” (Chemical Products); “Orders and business still strong.” (Primary Metals); “Order rate has slowed some. Supplier capacity in general seems to be improved.” (Machinery); “Large customers reducing pull rates for production.” (Computer & Electronic Products).
From the release:
Economic activity in the manufacturing sector expanded in August for the 13th consecutive month, and the overall economy grew for the 16th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “Manufacturing activity continued at a very positive rate in August as the PMI rose slightly when compared to July. In terms of month-over-month improvement, the Production and Employment Indexes experienced the greatest gains, while new orders continued to grow but at a slightly slower rate. August represents the 13th consecutive month of growth in U.S. manufacturing.”
There was an increase in Production (+2.9), Employment (+1.8), Inventories, of course (+1.2), Customer Inventories, of course (+4.5), Prices (+4), and a trade deficit busting Imports (+4.0). Yet declines occured in the key New Orders, Supplier Deliveries, Backlog of Orders and Exports categories. America continues to export its wealth abroad.
Respondents’ comments:
- “Still experiencing intermittent delays in electronic components due to capacity and raw materials.” (Electrical Equipment, Appliances & Components)
- “International sales are especially strong. Domestic business is solid.” (Chemical Products)
- “Orders and business still strong.” (Primary Metals)
- “Order rate has slowed some. Supplier capacity in general seems to be improved.” (Machinery)
- “Large customers reducing pull rates for production.” (Computer & Electronic Products)
Tabular summary of the results:
