ISM Drops (!) to 54.4

The market got slightly rattled this morning on the news that the ISM Index dropped from 56.3 to 54.4.

I need to point out that this doesn’t mean the economy contracted last month. Any ISM reading over 50 means the economy is expanding. Today’s ISM report is good news.

Bloomberg has a rundown of the other ISM indexes:

The ISM’s U.S. new orders measure declined to 51.1 from 53.1, while the production index dropped to 56.5 from 59.9.

The employment gauge fell to 56.5 in September, the lowest in six months, from 60.4, and the index of export orders dropped to 54.5, the lowest this year.

The measure of orders waiting to be filled fell to 46.5 from 51.5 and the index of prices paid jumped to 70.5 from 61.5.

The inventory index increased to 55.6 in September, the highest since July 1984. A figure higher than 50 means manufacturers increased stockpiles.

The other good news is that the Commerce Department said that consumer spending rose by 0.4% in August which matches the increase for July. Income, however, did a little better, rising 0.5% compared with a 0.2% rise in July.

Posted by on October 1st, 2010 at 10:56 am


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