The ISM released their monthly manufacturing report earlier this week. Although the headline number was a barely positive 50.1, new orders increased 2.8 and production advanced 1.1 (both increased to 52.9).These increases will hopefully keep next month’s number positive.However, only 7/18 industries reported growth, meaning a majority were either stagnant or in a contraction.The anecdotal comments were generally positive.But there were a few important negative points:
“Demand remains steady with three percent top line unit growth. [Dollar] ($) sales are flat due to currency and cost changes.” (Paper Products)
“Currency exchange is having a large impact on business results.” (Chemical Products)
“Energy market continues to struggle. Effects are beginning to bleed into other areas.” (Computer & Electronic Products)
“Business is improving. We still need young machinists to replace those retiring.” (Fabricated Metal Products)
“Business is picking-up in general.” (Transportation Equipment)
“Some level of slowing, but activity is acceptable.” (Machinery)
“Customer backlogs are increasing now that the perception[s] of raw material[s] pricing have bottomed out.” (Plastics & Rubber Products)
“Sales demand becoming more consistent. Beginning to see slightly more capital spending by key customers. Outlook more positive than negative.” (Electrical Equipment, Appliances & Components)
“Wood products market is sluggish with prices varying up/down depending on size and grade.” (Wood Products)
“So far bird flu has not been reintroduced as bird migration begins.” (Food, Beverage & Tobacco Products)
Although their general tenor was positive, the strong dollar continues to hurt business and the impact of the energy market slowdown is starting to widen.These two developments would also explain this weeks 1% drop in factory orders:
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