Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Stocks surged out of the gate today as it would seems “smart money” was aware of the ISM Manufacturing data which came in at 51.7 vs 51 estimated and 51.5 last month. New orders were up 1.9 but employment fell 2.6. The S&P 500 finally broke over that 1422 level which was the April 2012 highs, so now we will see if the employment data can add to this move.
Full report here.
“The PMI™ registered 51.7 percent, an increase of 0.2 percentage point from September’s reading of 51.5 percent, indicating growth in manufacturing at a slightly faster rate. The New Orders Index registered 54.2 percent, an increase of 1.9 percentage points from September, indicating growth in new orders for the second consecutive month. The Production Index registered 52.4 percent, an increase of 2.9 percentage points, indicating growth in production following two months of contraction. The Employment Index registered 52.1 percent, a decrease of 2.6 percentage points, and the Prices Index registered 55 percent, reflecting a decrease of 3 percentage points. Comments from the panel this month reflect continued concern over a fragile global economy and soft orders across several manufacturing sectors.”
PERFORMANCE BY INDUSTRY
Of the 18 manufacturing industries, eight are reporting growth in October in the following order: Petroleum & Coal Products; Furniture & Related Products; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Plastics & Rubber Products; and Chemical Products. The eight industries reporting contraction in October — listed in order — are: Primary Metals; Wood Products; Machinery; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Nonmetallic Mineral Products.
WHAT RESPONDENTS 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)
| MANUFACTURING AT A GLANCE OCTOBER 2012 |
||||||
|---|---|---|---|---|---|---|
|
Index |
Series Index Oct |
Series Index Sep |
Percentage Point Change |
Direction |
Rate of Change |
Trend* (Months) |
| PMI™ | 51.7 | 51.5 | +0.2 | Growing | Faster | 2 |
| New Orders | 54.2 | 52.3 | +1.9 | Growing | Faster | 2 |
| Production | 52.4 | 49.5 | +2.9 | Growing | From Contracting | 1 |
| Employment | 52.1 | 54.7 | -2.6 | Growing | Slower | 37 |
| Supplier Deliveries | 49.6 | 50.3 | -0.7 | Faster | From Slowing | 1 |
| Inventories | 50.0 | 50.5 | -0.5 | Unchanged | From Growing | 1 |
| Customers’ Inventories | 49.0 | 49.5 | -0.5 | Too Low | Faster | 11 |
| Prices | 55.0 | 58.0 | -3.0 | Increasing | Slower | 3 |
| Backlog of Orders | 41.5 | 44.0 | -2.5 | Contracting | Faster | 7 |
| Exports | 48.0 | 48.5 | -0.5 | Contracting | Faster | 5 |
| Imports | 47.5 | 49.5 | -2.0 | Contracting | Faster | 3 |
| OVERALL ECONOMY | Growing | Faster | 41 | |||
| Manufacturing Sector | Growing | Faster | 2 | |||
*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
