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Economy in Brief

ISM: Better But Not Out of the Woods
by Robert Brusca April 2, 2007

The chart on the left shows the ISM clearly has broken through the up trend from its recession recovery and now is in a well-established downtrend. Its recent up-tick is still in the grip of that down-trending range.

The table below shows the ISM and its components with a number of statistics that describe it/them. A quick perusal of the table shows why I like to evaluate the ISM by looking at the values in the LAST TWO columns instead of seeing if the index is above 50 (Rising) or below it (Falling).

Each of these ISM components has a different range variability characteristic, range of values and mean.

Even with the ISM above 50, as it is this month, it is still only in the 46th percentile of its range and at 96% of mean.

Only inventories, prices and the trade-related components are above their mean values. Employment, at 99% of its mean, is nearly there.

So while the ISM indicates expansion in the lexicon of the ISM we can see it is indeed a still wounded report that shows manufacturing is not yet up to par.

                        Placing ISM Readings in their Respective Ranges
  Since June 1998
ISM Current Std Dev Average SD%Avg MAX MIN Range Percentile % of AVG
PM Index 50.9 5.3 53.2 10.0 63.2 40.5 22.7 45.8 96
New Orders 51.6 6.7 55.8 12.0 71.3 38.4 32.9 40.1 93
Backlogs 47.0 6.7 50.4 13.4 66.5 36.0 30.5 36.1 93
Production 53.0 6.3 55.7 11.4 70.0 38.6 31.4 45.9 95
Supplier Deliveries 51.3 5.0 54.2 9.2 68.1 45.4 22.7 26.0 95
Inventories 47.5 3.9 45.8 8.6 53.6 37.1 16.5 63.0 104
Prices (Pd) 65.5 12.6 62.1 20.3 88.0 32.0 56.0 59.8 105
Employment 48.7 5.9 49.3 12.0 60.3 35.1 25.2 54.0 99
New Export Orders 55.5 3.5 53.6 6.6 60.2 44.3 15.9 70.4 104
Import Orders 57.5 3.6 54.6 6.6 61.5 46.9 14.6 72.6 105
Avg Days Lead For: Since June 1998
Production Material 45.0 3.2 47.1 6.9 55.0 38.0 17.0 41.2 96
Capital Expenditure 110.0 8.7 107.1 8.1 120.0 86.0 34.0 70.6 103
Maint., Repair, & Ops 22.0 2.1 22.5 9.5 29.0 17.0 12.0 41.7 98
Note: From April 1991 to Date; except back logs since Jan 1993
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