Monday, November 5, 2012

ISM Report on Business - 11/5/12

ISM's Non-Manufacturing Report on Business for October 2012 was released today. NMI, the composite index for Non-Manufacturing, came in at 54.15%, a decrease of 0.9% percentage points from September. PMI, the composite index for Manufacturing, was released on Thursday and was at 51.7%, an increase of 0.2 percentage points from September. A reading below 50 indicates that the sector is contracting. A reading below 42.6% for PMI indicates that the overall economy is declining. I have averaged the Manufacturing and Non-manufacturing components to create a composite reading.

Below is an interactive graph. You can interact with the graph by choosing what to display. The INDICATOR category contains all 10 areas surveyed as well as the PMI and NMI composites. The choices in the MA/NMA category allow you to view the Manufacturing report (MA), the Non-manufacturing report (NMA), and a composite of the two. The DATES category allows you to view specific periods of time.

Here is what some of the Respondents to the surveys are saying:


• "Market is still very soft." (Paper Products)
• "Business is picking up." (Furniture & Related Products) 
• "[Our] 4th quarters usually begin to show a slowdown in demand, and this year is no different; prices are also dropping." (Wood Products)
• "Demand down slightly due to customers pre-buying ahead of announced material price increases." (Plastics & Rubber Products)
 • "The slowing of capital expenditure in Europe and China has lowered our backlog for Q4." (Computer & Electronic Products)
• "We see a general softening in the steel and automotive markets in the fourth quarter." (Fabricated Metal Products)
• "Cuts in healthcare reimbursement rates continue to negatively affect top-line revenue." (Miscellaneous Manufacturing)
• "Business conditions stable to slightly improving." (Transportation Equipment)
• "Sales and order intake have slowed." (Primary Metals)
• "Europe is still very much a concern. Global recovery is still fragile." (Chemical Products)


• "Business with markets and customers we serve remains strong." (Management of Companies & Support Services)
• "Business is steady, with good fourth quarter expected." (Information)
• "The sluggish pace of economic recovery coupled with rapid increases in gas prices on the West Coast continue to drag down customer traffic and discretionary spending. Levels remain well below last year." (Arts, Entertainment & Recreation)
• "Ongoing concerns about healthcare reform; reluctance to expand or hire." (Health Care & Social Assistance)
• "Outlook is positive yet still guarded. Clients have some pent-up demand that they are acting on with short-term contracts." (Professional, Scientific & Technical Services)
• "More companies seeking relief from fuel increases." (Public Administration)

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Furthermore, these charts have limitations.  Economic data is often revised after the fact.  The market is forward looking and anticipates future events.  The unexpected can and will happen.  The market is continually changing.  The conditions of the past are different from the present.  Past performance is not an indication of future performance.