Friday, April 1, 2011

ISM Manufacturing Index Down 0.2 Point to 61.2 – Forward Looking Components Soften

The Institute for Supply Management's Manufacturing Index fell back slightly by 0.2 point in March to 61.2. Despite the modest decline, the index value is still very strong. Any value over 50 indicated manufacturing sector activity growth. Therefore, the softening of the index represents a slightly slower growth rate. Manufacturing activity continues to be one of the leading sectors of recovery.

With that said however, the details of the report indicate that the robust growth seen in manufacturing may soon be moving into a phase of more modest expansion. The forward looking components softened considerably. New orders fell 4.7 points to 63.3 and backlogged orders fell 6.5 points to 52.5. These are still strong, but are a significant deceleration. Changes in inventories also remained below the expansionary threshold for the second straight month, possibly indicating slower anticipated future demand growth. The report as a whole should be interpreted in a positive light, showing continued manufacturing strength; however, the fastest phase of growth may be slowing down somewhat.

> 50 = expansionMarFebJanDecNovOct
Activity Index61.261.460.858.558.256.9
    New Orders63.368.067.862.059.659.9
        Export Orders56.062.562.054.557.060.5
    Backlogged Orders52.559.

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