Econoday Report: ISM Mfg Index March 1, 2010

2010 Economic Calendar

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ISM Mfg Index

Released on 3/1/2010 10:00:00 AM For Feb, 2010

	Prior	Consensus	Consensus Range	Actual
ISM Mfg Index - Level	58.4	57.5	55.0 to 60.0	56.5

Highlights
The ISM index eased back in February to 56.5, still very strong but indicating a moderating rate of month-to-month for the manufacturing sector. But February does show increasing month-to-month strength for employment which rose nearly 3 points to a very strong 56.1 and offering an indication that spare capacity is being used up. Slowing deliveries also helped the main index as did strength in inventories.

New orders were also strong but did moderate to 59.5, breaking a string of exceptionally strong plus-60 readings. Backlog orders show special strength, up 5 points to 61.0 and are a key factor supporting what is increasingly becoming a positive outlook for employment.

Other readings include easing gains for production, strength in both exports and imports, and continued month-to-month pressure for prices paid. Equities got a lift from today's report which should ease concern over the month's heavy weather. The manufacturing sector has clearly emerged as the economy's central strength.

Market Consensus Before Announcement
The composite index from the ISM manufacturing survey in January jumped more than 3 points to 58.4 for its sixth straight month in positive territory. Looking ahead, the index should remain strong in February as the January new orders index posted its third straight reading over 60, rising more than 1 point to 65.9.

Definition
The Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. A composite diffusion index of national manufacturing conditions is constructed, where readings above (below) 50 percent indicate an expanding (contracting) factory sector. Export orders, import orders, backlog orders and prices paid for raw and unfinished materials are also measured, but these are not included in the overall index. Why Investors Care

The ISM manufacturing index (formerly known as the NAPM Survey) is constructed so that any level at 50 or above signifies growth in the manufacturing sector. A level above 43 or so, but below 50, indicates that the U.S. economy is still growing even though the manufacturing sector is contracting. Any level below 43 indicates that the economy is in recession.

Data Source: Haver Analytics

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