Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Poor number this morning on the ISM Manufacturing data, offset a bit by a very good construction spending of 1.4% (versus expected 0.4%). The ISM headline is lowest since July of 2009. Thus far the market has given back the morning gap up, so we’ll see how it react from here. New orders dropped significantly although slightly expansionary; employment dropped badly to contraction status. Hard to blame this one on Sandy as not much manufacturing is being done in Manhattan or New Jersey I presume. Full report here.
“The PMI™ registered 49.5 percent, a decrease of 2.2 percentage points from October’s reading of 51.7 percent, indicating contraction in manufacturing for the fourth time in the last six months. This month’s PMI™ reading reflects the lowest level since July 2009 when the PMI™ registered 49.2 percent. The New Orders Index registered 50.3 percent, a decrease of 3.9 percentage points from October, indicating growth in new orders for the third consecutive month. The Production Index registered 53.7 percent, an increase of 1.3 percentage points, indicating growth in production for the second consecutive month. The Employment Index registered 48.4 percent, a decrease of 3.7 percentage points, which is the index’s lowest reading since September 2009 when the Employment Index registered 47.8 percent. The Prices Index registered 52.5 percent, reflecting a decrease of 2.5 percentage points. Comments from the panel this month generally indicate that the second half of the year continues to show a slowdown in demand; respondents also express concern over how and when the fiscal cliff issue will be resolved.”
WHAT RESPONDENTS ARE SAYING …
- “Conditions still appear to be positive for continued growth in sales.” (Machinery)
- “Business is steady, but not much more than that. We are in a lull.” (Food, Beverage & Tobacco Products)
- “The principle business conditions that will affect the company over the next three or four quarters will be the U.S. federal government tax and budgetary policies; the impact of those policies is not yet clear.” (Petroleum & Coal Products)
- “Differences between first half of year and remaining half are very dramatic, growing to a peak in the middle of the year with a gradual decline since.” (Plastics & Rubber Products)
- “Seeing a slowdown in request for quote activity.” (Computer & Electronic Products)
- “The fiscal cliff is the big worry right now. We will not look toward any type of expansion until this is addressed; if the program that is put in place is more taxes and big spending cuts — which will push us toward recession — forget it.” (Fabricated Metal Products)
- “Seeing a slowdown in demand across markets.” (Electrical Equipment, Appliances & Components)
- “Economy is very sluggish. Production is down and orders have slowed considerably from Q1.” (Transportation Equipment)
- “East Coast storms delayed some shipments.” (Primary Metals)
- “Global economic uncertainty still seems to be sticking around which is not necessarily making things worse, but it is also not making things better from a demand standpoint.” (Chemical Products)
| MANUFACTURING AT A GLANCE NOVEMBER 2012 |
||||||
|---|---|---|---|---|---|---|
| Index | Series Index Nov |
Series Index Oct |
Percentage Point Change |
Direction | Rate of Change |
Trend* (Months) |
| PMI™ | 49.5 | 51.7 | -2.2 | Contracting | From Growing | 1 |
| New Orders | 50.3 | 54.2 | -3.9 | Growing | Slower | 3 |
| Production | 53.7 | 52.4 | +1.3 | Growing | Faster | 2 |
| Employment | 48.4 | 52.1 | -3.7 | Contracting | From Growing | 1 |
| Supplier Deliveries | 50.3 | 49.6 | +0.7 | Slowing | From Faster | 1 |
| Inventories | 45.0 | 50.0 | -5.0 | Contracting | From Unchanged | 1 |
| Customers’ Inventories | 42.5 | 49.0 | -6.5 | Too Low | Faster | 12 |
| Prices | 52.5 | 55.0 | -2.5 | Increasing | Slower | 4 |
| Backlog of Orders | 41.0 | 41.5 | -0.5 | Contracting | Faster | 8 |
| Exports | 47.0 | 48.0 | -1.0 | Contracting | Faster | 6 |
| Imports | 48.0 | 47.5 | +0.5 | Contracting | Slower | 4 |
| OVERALL ECONOMY | Growing | Slower | 42 | |||
| Manufacturing Sector | Contracting | From Growing | 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
