ISM Manufacturing – Contraction Zone (Chart)
December 3, 2012 10:18 am
The latest reading of the ISM Manufacturing was especially weak. Not only did it miss analysts estimates, but also came under the important 50 level.
The 50 mark is the demarcation pint between expansion and contraction. basically, when we see a level under this is shows that there is slack demand for manufactured goods. (This miss was predicted and discussed in the latest episode of the TDI Podcast)
Manufacturing in the U.S. unexpectedly contracted in November, reflecting weaker business demand, slower exports and disruptions from superstorm Sandy.
The Institute for Supply Management’s factory index decreased to 49.5 last month, the lowest since July 2009, from 51.7 in October, the Tempe, Arizona-based group said today. Economists projected the index would ease to 51.4, according to the median forecast in a Bloomberg survey. A reading of 50 marks the dividing line between expansion and contraction.
Less corporate investment in equipment as U.S. lawmakers debate the nation’s budget, weaker orders from overseas and disturbances related to the biggest Atlantic storm in history are converging to slow manufacturing. The data highlight an industry that’s contributing less to the economy than it had early in the expansion that began in 2009.