Prior Consensus Actual
ISM Mfg Index - Level 57.2 56.5 54.8
After 7 straight months of beating expectations, the ISM manufacturing index finally fell short and sharply so, at 54.8 in April which is 7 tenths below Econoday's low estimate. Yet standing on its own, April's report is very solid. Rates of plus-50 growth are very strong for production, up 1 point at 58.6, and new orders at 57.5 which, however, is the first sub-60 reading in 5 months.
But the unusual 60 run for new orders has been building up backlogs which continue to rise, at 57.0 which is very strong for this reading. Delays in delivery times eased slightly but still point to demand-related congestion in the supply chain. Inventories rose slightly which is a contrast to the PMI manufacturing report released earlier this morning and which is reporting intentional and defensive destocking.
Costs in both reports are very high while employment in the ISM, unlike the PMI and despite ISM's strength in backlogs, is slowing. A special positive for the ISM is building and extended strength for export orders, gains however that have not translated to strength for actual exports in data out of Washington.
The ISM along with the Philly Fed have been the most prominent of the advance reports signaling unusual strength for the factory sector, where aircraft in the government's data has had a strong year but other manufacturing much less so. Watch for the next government report on manufacturing: factory orders on Thursday.
Source: Bloomberg
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