After three straight weaker than expected reports, we got some good news on the manufacturing front with this morning’s better than expected ISM Manufacturing report. Just to illustrate how weak things have been in this report, six of the last eight ISM reports have been weaker than expected. While economists were expecting the headline index to come in at 48.5, the actual reading came in at 49.5. While this is the fifth straight monthly reading below 50 (longest streak since July 2009), it is also the second sequential improvement, so at least things are starting to move in the right direction.
The table below breaks down this month’s report by each of its components. Of the eleven components shown (including the headline), six increased this month, four declined, and one (New Orders) was unchanged. This represents the second straight month that breadth was positive, which is something we haven’t been able to say since August 2014. The biggest gainers this month were Backlog Orders and Prices Paid, Customer Inventories saw the largest decline. Compared to a year ago, breadth was predominantly skewed towards the negative side, but even here there were signs of a thaw as Customer Inventories, Prices Paid, and Backlog Orders all increased.