October 2016 ISM Manufacturing Survey Remains Marginally In Expansion

The ISM Manufacturing survey insignificantly improved and remained marginally in expansion. The key internals declined and but were mixed. The Markit PMI manufacturing Index, also released today, is in positive territory and improved.

Analyst Opinion of the ISM Manufacturing Survey

ISM manufacturing index movements have correlated with Industrial Production Manufacturing index only half the time in the last 12 months. Based on this survey and the divided district Federal Reserve Surveys (some in expansion, some in contraction), one would expect the Fed’s Industrial Production index to be little changed in October. Overall, surveys do not have a high correlation to the movement of industrial production (manufacturing) since the Great Recession..

There is nothing in the ISM or Markit reports that would leave one to think manufacturing is on the mend.

The ISM Manufacturing survey index (PMI) marginally improved from 51.5 to 51.9 (50 separates manufacturing contraction and expansion). This was slightly above expectations which were 50.6 to 52.2 (consensus 51.6).

Earlier today, the Markit PMI Manufacturing Index was released:

PMI reaches highest level for a year in October

Gains in output and new orders underpin sharp improvement in operating conditions
Jobs added again, albeit at modest pace
Cost inflation rises to highest level for two years
October’s headline Markit Final U.S. Manufacturing Purchasing Managers’ Index™ (PMITM) was slightly better than the earlier flash reading of 53.2, coming in at 53.4. That was a marked improvement on September’s 51.5 and the best reading recorded for a year. Operating conditions have continuously improved throughout the past seven years, with October’s PMI reading notable for being the highest recorded by the survey for 12 months.