Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
We just had the first real substantial miss in a key economic report in a few months – I am counting the ones that actually move the market. ISM Manufacturing came in light by over 2 points on the headline number. Thus far the market has sold off a bit, but not that much – let us see the reaction. Yesterday’s Chicago PMI was blockbuster but I think that is somewhat heavily reliant on automotive which is having a good rebound. Just one report at this time, and the buy the dip crowd will continue their action until they are actually penalized.
New orders fell 2.7, employment 1.1 and prices increased 6.0 – all things moving in the wrong direction.
Via ISM:
“The PMI registered 52.4 percent, a decrease of 1.7 percentage points from January’s reading of 54.1 percent, indicating expansion in the manufacturing sector for the 31st consecutive month. The New Orders Index registered 54.9 percent, a decrease of 2.7 percentage points from January’s reading of 57.6 percent, reflecting the 34th consecutive month of growth in new orders. Prices of raw materials increased for the second consecutive month, with the Prices Index registering 61.5 percent. As was the case in January, new orders, production and employment all grew in February — although at somewhat slower rates than in January. Comments from the panel continue to reflect a generally positive outlook for the next few months.”
WHAT RESPONDENTS ARE SAYING …
- “Business is holding steady. Concern over commodity prices ongoing.” (Chemical Products)
- “Still somewhat cautious about recovery. Expecting a good year, but not seeing orders yet.” (Machinery)
- “Demand remains consistent to strong on all levels.” (Paper Products)
- “Demand from auto makers is getting stronger.” (Fabricated Metal Products)
- “Manufacturing is busy. Spending money on new equipment to accommodate customer demands. Material prices are staying in check.” (Food, Beverage & Tobacco Products)
- “There seems to be a much more positive outlook for the economy. Customers are ordering material for stock rather than just working hand-to-mouth.” (Fabricated Metal Products)
- “Global GDP softening and beginning to impact the demand chain.” (Computer & Electronic Products)
- “Production is busy — several new large projects.” (Primary Metals)
- “Customers [are] lowering inventory levels, anticipating price decrease due to third-party published reports on materials.” (Plastics & Metal Products)
- “We are optimistic about the U.S. market this year, a little hesitant about what may happen in Europe and unsure about China.” (Transportation Equipment)
- “Shipments are increasing over last year. Waiting to see if the trend continues.” (Wood Products)
| MANUFACTURING AT A GLANCE FEBRUARY 2012 |
||||||
|---|---|---|---|---|---|---|
| Index | Series Index Feb |
Series Index Jan |
Percentage Point Change |
Direction | Rate of Change |
Trend* (Months) |
| PMI | 52.4 | 54.1 | -1.7 | Growing | Slower | 31 |
| New Orders | 54.9 | 57.6 | -2.7 | Growing | Slower | 34 |
| Production | 55.3 | 55.7 | -0.4 | Growing | Slower | 33 |
| Employment | 53.2 | 54.3 | -1.1 | Growing | Slower | 29 |
| Supplier Deliveries | 49.0 | 53.6 | -4.6 | Faster | From Slowing | 1 |
| Inventories | 49.5 | 49.5 | 0.0 | Contracting | Same | 5 |
| Customers’ Inventories | 46.0 | 47.5 | -1.5 | Too Low | Faster | 3 |
| Prices | 61.5 | 55.5 | +6.0 | Increasing | Faster | 2 |
| Backlog of Orders | 52.0 | 52.5 | -0.5 | Growing | Slower | 2 |
| Exports | 59.5 | 55.0 | +4.5 | Growing | Faster | 4 |
| Imports | 54.0 | 52.5 | +1.5 | Growing | Faster | 3 |
| OVERALL ECONOMY | Growing | Slower | 33 | |||
| Manufacturing Sector | Growing | Slower | 31 | |||
*Number of months moving in current direction.
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