ISM for November 2009 - 53.6%

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The Institute for Supply Management Manufacturing Survey is out. The PMI is at 53.6%, down 2.1% from last month. Anything above 50 is growth.

 

Production dropped -3.4% in one month, but is still in growth.

 

 

Employment is down -2.3% from last month, now at 50.8%.

 

 

On inventories most manufacturers reported their levels were about right with around a third reported them as too low. Inventories being too low would be a signal for new hiring.

 

 

New Orders, while above 50% for 4 months now, at 60.3%, is the 3rd lowest month survey result since August 2009.

 

 

MANUFACTURING AT A GLANCE
NOVEMBER 2009

Index

 Series
Index
Nov.		 Series
Index
Oct.		 %
Point
Change

Direction

 Rate
of
Change		 Trend
(Months)
PMI 53.6 55.7 -2.1 Growing Slower 4
New Orders 60.3 58.5 +1.8 Growing Faster 5
Production 59.9 63.3 -3.4 Growing Slower 6
Employment 50.8 53.1 -2.3 Growing Slower 2
Supplier Deliveries 55.7 56.9 -1.2 Slowing Slower 6
Inventories 41.3 46.9 -5.6 Contracting Faster 43
Customers' Inventories 37.0 38.5 -1.5 Too Low Faster 8
Prices 55.0 65.0 -10.0 Increasing Slower 5
Backlog of Orders 52.0 53.5 -1.5 Growing Slower 4
Exports 56.0 55.5 +0.5 Growing Faster 5
Imports 51.5 51.0 +0.5 Growing Faster 3
             
OVERALL ECONOMY Growing Slower 7
Manufacturing Sector Growing Slower 4

 

Relationship of PMI to GDP

The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (45.4 percent) corresponds to a 1.3 percent increase in real gross domestic product (GDP). However, if the PMI for November (53.6 percent) is annualized, it corresponds to a 3.9 percent increase in real GDP annually.

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Paul Krugman warning double dip recession

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Paul Krugman is warning on a double dip recession, brought on in part by today's ISM report:

I’ve never been fully committed to the notion that we’re going to have a “double dip” — that the economy will slide back into recession. But it has been clear for a while that it’s a serious possibility, for two reasons. First, a large part of the growth we’ve had has been driven by the stimulus — but the stimulus has already had its maximum impact on the growth of GDP, will hit its maximum impact on the level of GDP in the middle of next year, and then will begin to fade out. Second, the rise in manufacturing production is to a large extent an inventory bounce — and this, too, will fade out in the quarters ahead.

He links to some bad news reports that Stimulus construction jobs are already fading.

I didn't track on specifically what infrastructure has already been spent via Stimulus but that's something someone else might want to take a look at and write in a comment here or under the CBO post.