ISM - Misses Expectations

The Institute of Supply Management released their manufacturing index today.  As predicted in yesterdays posting on the Chicago ISM Business Barometer the ISM Manufacturing index came in below expectations (54.1 vs 54.5) with large builds in both inventory components. Outside of inventories there was not much going on in the most recent report with the notable exception of prices paid which jumped markedly in January.  This will, of course, potentially affect profit margins in the months ahead.  More importantly, and as discussed yesterday, the real question is whether or not we have seen the peak for this current economic cycle.

Internally it is always interesting see what the respondents are actually saying in regards to the their business and the economy as a whole to wit:

• "Still seeing raw materials pricing moving down in general, but expect inflation later in the quarter." (Chemical Products)
• "Year starting a little slow, but customers are positive about increased business in 2012." (Machinery)
• "Once again, business continues to be strong." (Paper Products)
• "Pricing remains in check with the demand we are seeing. Supplier deliveries are on time or early." (Food, Bev & Tobacco Products)
• "The economy seems to be slowly improving." (Fabricated Metal Products)
• "Business lost to offshore is coming back." (Computer & Electronic Products)
• "Business remains strong. Order intake is great — more than 20 percent above budget." (Primary Metals)
• "Indications are that 2012 business environment will improve over 2011." (Transportation Equipment)
• "Market conditions appear to be improving, with the outlook for 2012 better yet." (Wood Products)

These ...