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Market Update : 
ISM Index Rises to 44.8%
Author: 123jump.com Staff
123jump.com
Last Update: 10:22 AM ET July 01 2009


Manufacturing contracted at a slower rate in June as the PMI registered 44.8%, which is 2 percentage points higher than the 42.8% reported in May. This is the 17th consecutive month of contraction in the manufacturing sector.

 
The following is the unedited transcript of the news release from Institute for Supply Management .


PERFORMANCE BY INDUSTRY

Seven of the 18 manufacturing industries reported growth in June. These industries listed in order are: Petroleum & Coal Products; Printing & Related Support Activities; Wood Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; and Primary Metals. The industries reporting contraction in June listed in order are: Apparel, Leather & Allied Products; Furniture & Related Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Textile Mills; Transportation Equipment; Food, Beverage & Tobacco Products; and Fabricated Metal Products.

WHAT RESPONDENTS ARE SAYING ...

""""Customer inventory burn is complete and real demand has reappeared."""" (Machinery)
""""... a lot of people are requoting old business and using favorable pricing to negotiate with their current suppliers."""" (Computer & Electronic Products)
""""Banks are reluctant to lend to businesses, and until this changes the economy will continue to be weak."""" (Fabricated Metal Products)
""""Slow June, but firm large orders in July, August and September."""" (Food, Beverage & Tobacco Products)
""""Market appears to have bottomed out as aftermarket has picked up slightly over the past month."""" (Transportation Equipment)


COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum Based Products; Copper; Corn; Diesel Fuel; Oil; and Plastics.
Commodities Down in Price

Caustic Soda (4); Corrugated Containers (6); Steel (10); and Steel Products (5).
Commodities in Short Supply

No commodities are reported in short supply.

PMI

Manufacturing contracted at a slower rate in June as the PMI registered 44.8 percent, which is 2 percentage points higher than the 42.8 percent reported in May. This is the 17th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the second consecutive month in the overall economy, and continuing contraction in the manufacturing sector. Ore stated, """"The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (39.2 percent) corresponds to a 0.6 percent decrease in real gross domestic product (GDP). However, if the PMI for June (44.8 percent) is annualized, it corresponds to a 1.1 percent increase in real GDP annually.""""

New Orders

ISM''s New Orders Index registered 49.2 percent in June, 1.9 percentage points lower than the 51.1 percent registered in May. May represented the first month of growth in new orders, following 17 consecutive months of contraction. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau''s series on manufacturing orders (in constant 2000 dollars).

The 10 industries reporting growth in new orders in June listed in order are: Printing & Related Support Activities; Primary Metals; Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Chemical Products. The five industries contracting in June listed in order are: Apparel, Leather & Allied Products; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Machinery.

Production

ISM''s Production Index registered 52.5 percent in June, which is an increase of 6.5 percentage points from May''s reading of 46 percent. An index above 50.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board''s Industrial Production figures. This is the first month the Production Index has moved above 50 percent, following nine months of contraction.
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