ISM manufacturing

Manufacturing ISM for September 2010 - 54.4%

The September 2010 ISM Manufacturing Survey is out and PMI came in at 54.4%. August 2010 manufacturing ISM was 56.3%. This is a -1.9% decline in the factory index. While this is the 14th month for expansion (anything above 50 is an expansion), this is a slowing on the manufacturing ISM. The below graph shows PMI is now back to December 2009 levels.

 

Manufacturing ISM for June 2010 - 56.2%

The June 2010 ISM Manufacturing Survey is out and PMI came in at 56.2%. This is a decline of -3.5% from last month's 59.7%. While this is the 11th month for expansion (anything above 50 is an expansion), this is a slowing on the manufacturing ISM. Why is this important? There is a relationship to overall GDP growth. The below GDP correlation numbers are annual. Taken to quarterly, the PMI correlation implies rough 2.2% Q2 2010 GDP. A correlation is not a fact so take this number with a wet thumb in the air.
(Q_i = ((Q_a + 1)^{-4})Q_{i-1})

The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (58.5 percent) corresponds to a 5.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for June (56.2 percent) is annualized, it corresponds to a 4.8 percent increase in real GDP annually.

 

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