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Adam G.

York, Economic Analyst


adam.york@wachovia.com ● 704-715-9660

February 02, 2009

ISM Manufacturing Index Moved Higher


The ISM manufacturing index moved up to 35.6, off of a multi-decade low set in December. Key sub-indices
including production and new orders both moved higher. Employment held at 29.9, which would suggest a 500,000
plus job loss is probable in Friday’s release. Manufacturing still contracted sharply, despite the increase.
New Orders Jumped Up Employment Flat, Prices Bounced Higher
• The headline index increased for the first time since June, but • The employment index was unchanged in January at 29.9, a 26
remains extremely depressed. New orders also jumped nearly year low. This extremely low reading suggests massive losses
ten points higher. While coming in better than expected, it is in manufacturing payrolls in data to be released on Friday.
too early to celebrate. Manufacturing remains under • The prices paid index bounced back higher, but most
considerable pressure and output will likely contract through manufacturers continued to see lower input costs. Inflation is
at least the first half of the year. not the concern going forward; deflation may be.

ISM Manufacturing Composite Index ISM Employment Index


Diffusion Index Diffusion Index
65 65 65 65

60 60 60 60

55 55
55 55

50 50
50 50
45 45
45 45
40 40

40 40
35 35

35 35 30 30
ISM Composite Index: Jan @ 35.6 ISM Manufacturing Employment: Jan @ 29.9
12-Month Moving Average: Jan @ 44.3 ISM Manufacturing - 12 Month Moving Average: Jan @ 41.7
30 30 25 25
87 89 91 93 95 97 99 01 03 05 07 92 94 96 98 00 02 04 06 08

ISM New Orders Index ISM Price Index


Diffusion Index Diffusion Index
75 75 100 100

70 70 90 90
65 65
80 80
60 60
70 70
55 55

50 50 60 60

45 45 50 50
40 40
40 40
35 35
30 30
30 30

25 New Orders: Jan @ 33.2 25 20 ISM Prices Index: Jan @ 29.0 20


ISM - 12 Month Moving Average: Jan @ 40.8 12-Month Moving Average: Jan @ 62.5
20 20 10 10
87 89 91 93 95 97 99 01 03 05 07 09 92 94 96 98 00 02 04 06 08

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