Updated: 06-May-08 12:23 ET

April ISM Index

Updated: 06-May-08 12:23 ET

Highlights

A generally stable read the past few months.  That isn't so bad considering that the actual industrial production data have held up well.  A reading of 48.6 is below the 50 level that is supposed to show overall growth, but this survey is not precise and a reading at this level is not raising red flags.
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Key Factors

Big Picture

• This is a highly over-rated index.  It is merely a survey of purchasing managers.  It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse.  It does not weight for size of the firm, or for the degree of better/worse.  It can therefore underestimate conditions if there is a great deal of strength in a few firms.  That may well be what is happening at present with exports booming at large firms, but not necessarily across all manufacturing sectors.  The current readings on the ISM manufacturing index are providing a more negative view of conditions than the actual industrial production data.  The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle.  It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.