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ISM: Manufacturing Index Down for 6th Straight Month

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Economic Update: ISM Manufacturing Index

The ISM (Institute of Supply Management) Manufacturing index shows that growth in the manufacturing sector of the U.S. economy declined for the sixth consecutive month in December.

The all-important index, which is a proxy for the state of the manufacturing sector in the U.S., came in at 48.2, which was below the consensus estimate for 49.0 as well as last month’s reading of 48.6.

Also note that the index has now come in below 50 – the line of demarcation between expansion and contraction – for a second straight month.

Recent reading for reference purposes:

  • November: 48.6
  • October: 50.1
  • September: 50.2
  • August: 51.1
  • July: 52.7
  • June: 53.5
  • May: 52.8
  • April: 51.5
  • March: 52.5
  • February: 52.9
  • January 2015: 53.5
  • December: 55.1
  • November: 58.7
  • October: 59.0
  • September: 56.6
  • August: 59.0
  • July: 57.1
  • June: 56.3
  • May: 55.4
  • April: 54.9
  • March: 53.7
  • February: 53.2
  • January 2014: 51.3

In addition, all of the major component indices were reported below 50, with the Employment component particularly disappointing.

The New Orders component was reported 49.2, which was above last month’s reading of 48.9.

The Employment Index came in at 48.1, which was well below last month’s reading of 51.3.

The Prices Paid component, which is a measure of inflation, came in at 33.5 vs. last month’s reading of 35.5.

Finally, the Production component came in at 49.8, which was above last month’s reading of 49.2.

The ISM Manufacturing index is designed to indicate the state of the manufacturing sector in the U.S. Readings above 50 are indicative of expansion while below 50 suggests contraction in the sector.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

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About the Author

David Moenning is the Chief Investment Officer at Sowell Management Services. Dave began his investment career in 1980 and has been an independent money manager since 1987. Thus, Dave has been live on the firing line and investing for a living for more than 29 years.