ISM Manufacturing Index Ends Year Higher, Has It Peaked?

Posted on January 3, 2011

ISM Manufacturing Index, Has it peakedThe Institute for Supply Management manufacturing index registered 57.0 in December, 0.4 higher than in November. The largest positive increases were in the production index, which registered at 60.7, up by 5.7 , the new orders index, which registered at 60.9, up by 4.3, and the prices index, which registered at 72.5, up by 3.0.  The largest negative declines were in employment, which registered at 55.7, down by -1.8 and exports, which registered at 54.5, down by -2.5.

The manufacturing index reached a peak in April 2010 and is now at or near 25 highs. Even the employment index, which the ISM says that a reading above 49.8 is generally consistent with an increase in BLS data on manufacturing employment, is at or near 30  year highs.

ISM Manufacturing Index Jan 1979- Dec 2010

Source: ISM / The Mays Report

So if you are hoping for continued improvement in employment I am sorry to tell you that at least from a manufacturing standpoint, this is probably about as good as it is going to get. In fact, most of the series indexes are at or near long-term highs. This combined with the bullish market sentiment, signals that while another recession looks doubtful, a short-term peak appears to be in our midst.

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