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ISM Disappoints, While Market Maintains its Gains

March 1st, 2010 Michael McDonough

The February’s manufacturing ISM slipped to 56.5, versus a 58.4 a month prior.  Disappointing the latest Bloomberg consensus forecast of 58.0.  Any level over 50 signifies expansion in the sector.  I continue to believe that as inventory restocking begins to slow the ISM manufacturing index will suffer as 2010 progresses.  That is without a new source of demand for manufactured goods, which does not appear to be on the short-term horizon.

Looking at the ISM’s components, prices paid fell to 67.0 from 70.0, the employment index climbed to 56.1 from 53.3, and the new orders index declined to 59.5 from 65.9. A jump in the employment index could bode well for this Friday’s employment report, which could be battered by weather related effects.

Manufacturing ISM & ISM Employment Index

Source: Bloomberg

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