Over on SupplyExcellence, my colleague Pat Furey weighed in on today's release of the November ISM Manufacturing numbers. His key take-aways from the data:
- PMI (Manufacturing Index) for November came in at 53.6, which still indicates that the sector is in expansion mode. This is the 4th consecutive month above 50, although the number was down slightly from October (55.7).
- The New Orders Index jumped to 60.3 (58.5) and the Inventories index dropped to 41.3 (46.9) - generally, this means that production will have to increase in the following months to close the gap between bookings and inventory levels.
- The Employment Index was down from 53.1 in October to 50.8 - while it is a positive sign that this index is still above 50, the drop is concerning and is yet another sign of relative weakness in the jobs market (further fuel to the jobless recovery theme).
And perhaps more importantly, Pat's analysis of what these November numbers mean for the broader manufacturing, employment and economic pictures:
"Overall, I see these numbers as a relatively positive sign that the recovery in the manufacturing sector is continuing. Most analysts had expected the overall index (PMI) to come in around 55, but I was expecting a number closer to 50 due to the expiration of some government incentive programs such as cash for clunkers. 53.6 still indicates that the market is expanding, so people should not over-react to the drop from October to November. Furthermore, the increase in the New Orders Index and the drop in Inventories indicates that production should increase in December. I expect that December will have another index reading in excess of 53, marking the 5th consecutive month of expansion.
The one area of concern is the employment numbers. The drop to 50.8 indicates that manufacturing managers are being extremely cautious on hiring, waiting to insure that the recovery has firmly taken hold. Again, the growth in bookings should result in an increase in production in December, which should result in an improved employment picture. Look for the employment index to tick back up in December.
The Services Sector numbers are due out on Thursday, so we will report back then. The next big piece of data we are watching for manufacturing is the Fed’s report on Industrial Production and Utilization, which is due out in a few weeks."