ISM Report on Business - 8/3/12

ISM's Non-Manufacturing Report on Business for July 2012 was released today. NMI, the composite index for Non-Manufacturing, came in at 52.6% up .5% from June. PMI, the composite index for Manufacturing, was released on Wednesday and was at 49.8% and was up .1% from June. 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.

PMI and NMI were led by gains in Production. However, the gains came at the expense of paring down the Backlog of Orders which isn't sustainable long term.

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:

Manufacturing 

• "Business has been up for the last seven consecutive months — strong customer orders coming in." (Machinery) 
•  "Automotive demand remains strong." (Fabricated Metal Products) 
• "Resin pricing has bottomed out so customer orders have increased; it was pent-up demand." (Plastics & Rubber Products)
• "We have noticed a marked slowing in business overall. [We] have confirmed this with other companies in our industry as well." (Wood Products)
• "Forecasts remain high, but actual bookings remain flat." (Computer & Electronic Products)
• "Taking a conservative approach to spending including hiring, travel and inventory. U.S. economy seems stuck — at best — with little to no growth." (Apparel, Leather & Allied Products)
• "Business remains surprisingly strong." (Primary Metals)
• "Continued slowdown in government military sector spending in advance of the presidential elections has seriously impacted business performance." (Transportation Equipment)
• "Business is softening, requiring some down production days." (Furniture & Related Products)
• "General state of business this month is flat, with increasing economic uncertainty." (Chemical Products)

Non-Manufacturing

• "The general economy and unemployment are keeping our business flat." (Health Care & Social Assistance)
• "Beginning to see effects of slowing economy. New orders are down versus same time last year." (Information)
• "Business is slowing; input costs are weakening." (Agriculture, Forestry, Fishing & Hunting)
• "Seeing a slight uptick in sales revenue." (Public Administration)
• Things have not changed too much this past month; however, we are seeing more aggressive marketing/sales efforts by suppliers hungry for business." (Transportation & Warehousing)
• "Overall, we are still seeing growth over last year, but the sequential growth has gone flat to negative." (Wholesale Trade)

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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.