New ISM Data Cautiously Optimistic

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Macroeconomics

We have made it a monthly habit here on MetalMiner to report the most recent ISM (Institute of Supply Management) Report on Business. And though one can find the press accounts everywhere, we tend to take a more granular look at the data analyzing some of the underlying trends and numbers. This month’s release provides some good news.

Of the 11 areas the survey examines, we’ll examine four that we found the most telling, the overall PMI, new orders, production and backlog of orders. First the PMI coming in at 55.7 marking the third month in the row of a manufacturing expansion and perhaps more interesting, the highest reading since April 2006. As MetalMiner readers know, we don’t call a trend until we have three data points. Not only did the trend continue, October numbers came in 3.1 points higher than September numbers.

Looking at new orders, the index registered growth at 58.5 percent at a four-month trend. However, new orders were down 2.3% compared to new orders in September. For metals related industries, only fabricated metal products saw an uptick in new orders. We’ll continue to watch new order numbers closely.

Backlog orders also hit a three-month trend with 53.5% in October, the same as in September. Of the nine industries reporting an increase in backlog both machinery and fabricated metal products saw increases. Finally the numbers for production, now in a 5-month trend line increased 7.6% points to 63.3% from 55.7%. 11 industries reported growth in production including machinery and fabricated metal products. Only two industries reported declines in production for October including primary metals.

Other bits of upbeat news relate to employment which saw an increase of 6.9% and also represented the first time in 14 months that employment improved in manufacturing. Certainly our own anecdotal evidence suggests manufacturers are feeling more confident. And though we won’t rain on the parade, we know that like metals markets, the overall business environment remains choppy.

–Lisa Reisman

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