Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Market has spiked nicely here on the ISM Manufacturing report which came in back in expansionary mode (over 50) versus an expectation of 49.7 and last month’s 49.6. Obviously a net positive. As for the sub indexes new orders bursted higher by 5.2 to 52.3, and employment jumped 3.1 to 54.7 – prices also were hot at 58, an increase of 4. While the latter would normally be an issue the Fed wants inflation so “no problem” there (for them).
(totally unrelated, construction spending was weak at -0.6% but no one cares)
Full report here.
“The PMI™ registered 51.5 percent, an increase of 1.9 percentage points from August’s reading of 49.6 percent, indicating a return to expansion after contracting for three consecutive months. The New Orders Index registered 52.3 percent, an increase of 5.2 percentage points from August, indicating growth in new orders after three consecutive months of contraction. The Production Index registered 49.5 percent, an increase of 2.3 percentage points and indicating contraction in production for the second time since May 2009. The Employment Index increased by 3.1 percentage points, registering 54.7 percent. The Prices Index increased 4 percentage points from its August reading to 58 percent. Comments from the panel reflect a mix of optimism over new orders beginning to pick up, and continued concern over soft global business conditions and an unsettled political environment.”
WHAT RESPONDENTS ARE SAYING …
- “Appears that our so-called ‘slowdown’ was a summer thing. September brings with it increasing requirements and business.” (Paper Products)
- “Business improved through Q3, but is beginning to show signs of slowing down in Q4; this has been a typical trend over the last few years.” (Wood Products)
- “Business has picked up going into the last quarter.” (Plastics & Rubber Products)
- “We are sticking to our manufacturing plan, but have slowed production down considerably. Haven’t added any new units to the 2012 plan, and still have no forecast for 2013 released.” (Computer & Electronic Products)
- “Sales have tanked over the last two months, bringing a very concerned and stressed management team. Not very optimistic for the near-term future.” (Apparel, Leather & Allied Products)
- “Uncertainty in the healthcare legislation (reform) continues to be the underlying force keeping our sales revenue below its full potential.” (Miscellaneous Manufacturing)
- “Steel and aluminum prices still dropping, and auto production orders are up.” (Transportation Equipment)
- “Domestic business is up; international is down.” (Electrical Equipment, Appliances & Components)
- “Demand seems to have stabilized from August. New orders are appearing this month without advanced notice from our customers.” (Chemical Products)
| MANUFACTURING AT A GLANCE SEPTEMBER 2012 |
||||||
|---|---|---|---|---|---|---|
| Index | Series Index Sep |
Series Index Aug |
Percentage Point Change |
Direction | Rate of Change |
Trend* (Months) |
| PMI™ | 51.5 | 49.6 | +1.9 | Growing | From Contracting | 1 |
| New Orders | 52.3 | 47.1 | +5.2 | Growing | From Contracting | 1 |
| Production | 49.5 | 47.2 | +2.3 | Contracting | Slower | 2 |
| Employment | 54.7 | 51.6 | +3.1 | Growing | Faster | 36 |
| Supplier Deliveries | 50.3 | 49.3 | +1.0 | Slowing | From Faster | 1 |
| Inventories | 50.5 | 53.0 | -2.5 | Growing | Slower | 2 |
| Customers’ Inventories | 49.5 | 49.0 | +0.5 | Too Low | Slower | 10 |
| Prices | 58.0 | 54.0 | +4.0 | Increasing | Faster | 2 |
| Backlog of Orders | 44.0 | 42.5 | +1.5 | Contracting | Slower | 6 |
| Exports | 48.5 | 47.0 | +1.5 | Contracting | Slower | 4 |
| Imports | 49.5 | 49.0 | +0.5 | Contracting | Slower | 2 |
| OVERALL ECONOMY | Growing | Faster | 40 | |||
| Manufacturing Sector | Growing | From Contracting | 1 | |||
*Number of months moving in current direction.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
