Seeking Alpha

Nov. ISM Manufacturing Index: 49.5 vs. 51.7 consensus and 51.7 prior. Prices index 52.5 vs. 55.0...

Nov. ISM Manufacturing Index: 49.5 vs. 51.7 consensus and 51.7 prior. Prices index 52.5 vs. 55.0 prior. Employment 48.4 vs. 52.1 prior. Inventories 45.0 vs. 50.0 prior. New orders 50.3 vs. 54.2 prior.
Comments (7)
  • GaltMachine
    , contributor
    Comments (1129) | Send Message
     
    Is there a lot of manufacturing in the Sandy affected areas?

     

    Pretty big miss to "expectations" which are apparently supposed to take into account known factors like Sandy when those expectations are calculated.

     

    "The PMI™ registered 49.5 percent, a decrease of 2.2 percentage points from October's reading of 51.7 percent, indicating contraction in manufacturing for the fourth time in the last six months. This month's PMI™ reading reflects the lowest level since July 2009 when the PMI™ registered 49.2 percent. The New Orders Index registered 50.3 percent, a decrease of 3.9 percentage points from October, indicating growth in new orders for the third consecutive month."
    3 Dec 2012, 10:06 AM Reply Like
  • Joe Eifrid
    , contributor
    Comments (336) | Send Message
     
    Section 179 stimulus has big changes coming year end unless extended and could weigh on manufacturing capital goods.

     

    IRC Section 179 has provided businesses with the ability to substantially accelerate depreciation on qualified purchases for the last decade. The limitation on the available deduction grew to $500,000 during 2010 and 2011 as Congress intended for the increased limits to assist businesses in light of the recession. For 2012, the available deduction has been decreased to $139,000. Without intervention by Congress, the deduction will decrease further for 2013 to $25,000.

     

    IRC Section 179 allows businesses to deduct or expense the purchase price of equipment and machinery, as well as certain vehicles and software in the year of purchase, as opposed to depreciating the equipment over the life of the asset. There are certain limitations that apply to the Section 179 deduction including a cap on total equipment purchases ($560,000 for 2012, to be reduced to $200,000 for 2013.) Additionally, the Section 179 deduction may not exceed taxable income for the year in which it is taken.
    In addition to Section 179, accelerated (bonus) first year depreciation is also available for certain new fixed asset purchases. For 2012, the bonus depreciation available for purchases decreased from 100% in 2011 to 50% in 2012. The bonus depreciation deduction is also scheduled to expire in 2013 without intervention by Congress.
    3 Dec 2012, 10:11 AM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    Europe is down...China you never know with their numbers...Japan is down....so we should follow....wait until the cliff kicks in.....and it will even if something is passed....but there will be a lot of revenues from dividend and capital gains taxes taken this year.....before the cliff..we might run a surplus in the first quarter....then depression
    3 Dec 2012, 10:12 AM Reply Like
  • mjc99
    , contributor
    Comments (69) | Send Message
     
    The reported November PMI manufacturing index increased to 52.8 this morning. Is the ISM manufacturing index that much more meaningful than the PMI index?
    3 Dec 2012, 10:56 AM Reply Like
  • GaltMachine
    , contributor
    Comments (1129) | Send Message
     
    mjc,

     

    The ISM is considered the standard for this indicator. The Markit is the new kid on the block for the US so I guess it has less credibility as a result - also a very limited track record.

     

    The ISM new orders component has a big weighting in the Conference Board's Leading Economic Index (LEI) so it is a significant piece of data on the US economy.
    3 Dec 2012, 11:29 AM Reply Like
  • mjc99
    , contributor
    Comments (69) | Send Message
     
    Thank you GaltMachine for your response.
    3 Dec 2012, 11:42 AM Reply Like
  • GaltMachine
    , contributor
    Comments (1129) | Send Message
     
    mjc,

     

    Great blog called Calculated Risk has a phenomenal charts gallery and has a great write up on the ISM. Here's a link:

     

    http://bit.ly/THQ34s
    3 Dec 2012, 12:52 PM Reply Like
DJIA (DIA) S&P 500 (SPY)