Last Update: 01-Apr-15 10:32 ET
- The ISM Manufacturing Index declined to 51.5 in March from 52.9 in February. The Briefing.com Consensus expected the index to decrease to 52.5.
- Nearly all of the regional manufacturing surveys pointed toward a sharp deceleration in the national manufacturing index. The drop in the ISM Index shouldn't have been much of a surprise.
- Production levels actually improved, albeit by a very small margin, as the related index increased to 53.8 in March from 53.7 in February. The small acceleration in production, however, was not the result of stronger demand. New orders softened as the index fell to 51.8 in March from 52.5 in February.
- Instead, the gain in production was a direct result of manufacturers paring down their unfilled orders. The Backlog of Orders Index contracted in March, falling to 49.4 from 51.5.
- Without a steady supply of back orders, further weakening in new orders could result in the end of 31 consecutive monthly expansions in production levels in April.
- The Employment Index declined to 50.0 from 51.4 in February.
- This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
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