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The ISM report may have missed expectations, but the "internals" (defined as New Orders minus...

The ISM report may have missed expectations, but the "internals" (defined as New Orders minus Inventory) continue to improve rather smartly. It's likely a good part of the decline in the headline number came from a big drop in prices paid (from 61 to 47.5).
Comments (2)
  • B O'hara
    , contributor
    Comments (25) | Send Message
    that's quite some spin. Look at the production number - down 5.4% m/m. How's that for improving internals? Exports, backlog, deliveries, employment all down m/m yet we're supposed to believe that things are improving "smartly"? Five of the indices are now in contraction yet just because new orders were up slightly while inventories dropped we're supposed to think the real message here is one of an improving economy? You need to think before you right this junk.
    1 Jun 2012, 10:37 AM Reply Like
  • Kevin Flynn, CFA
    , contributor
    Comments (650) | Send Message
    New orders were up due to seasonal adjustments. % respondents reporting higher orders fell from 41% to 37%, worse orders increased from 11% to 14%, and the net dropped to plus 23 from plus 30. They were "the highest since April 2011," which also benefited from seasonal adjustments and proved to be a worthless indicator of coming months.


    Prices are a more sensitive real-time indicator, and the steep decline is disturbing. Nine sectors reported declining prices versus six increasing, and that is worrisome indeed - a strong report would have at most one or two price declines. I wouldn't go so far as to call it a lemon, because respondent comments were broadly positive. One has to wonder, though, if they would respond the same way today.
    1 Jun 2012, 11:02 AM Reply Like
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