ISM Report Bucking The Trend

Today's release of the Institute of Supply Management's survey of the manufacturing business posted a better than expected increase of 54.8 versus last month's reading of 53.4.  Overall, the report was surprisingly positive showing increases in new orders which jumped to 58.2 from 54.5 last month.  Production was strong and employment increased.  Most interestingly was the increase in export orders despite weakness in Europe and the slowing in China.  Inventories declined which is a positive and points to the need for future orders in order to replenish inventories.  The negative was the "prices paid" component which remained elevated.  Higher levels of prices being paid out ultimately impacts profit margins.  

This report, however, is a bit of head scratcher given the weakness in a variety of previous manufacturing related weakness in recent weeks.  Here is the rundown of the recent reports so far: 

• Chicago Fed National Activity Index (a broad index of 85 components) declined from .07 to -0.29 in March
• Chicago PMI declined from 62.20 to 56.20 in April.
• Richmond Fed Manufacturing Index increased from 7 to 14 in April.  This was a rebound after a sharp decline of 20 to 7 in March.
• New York Fed Manufacturing Index decreased from 20.21 to 6.56 in April
• Philadelphia Fed Manufacturing Survey dropped from 12.5 to 8.5 in April
• Dallas Fed Business Activity Index declined from 10.8 to -3.4 in April
Kansas City Fed Manufacturing Index dropped from 9 to 3 in ...