The monthly release of the ISM Manufacturing report is starting to resemble a broken record. While economists were forecasting this morning's report for November to come in at a level of 55.1, the actual reading came in at 57.3, which was the strongest reading for this indicator since April 2011. On top of that, it also marked the sixth straight month that the ISM Manufacturing report came in better than expected. Going back to 1998, there has not been another period where the ISM Manufacturing report was better than expected and above 50 for six straight months!
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The table below breaks down the individual components of the ISM Manufacturing report and compares the readings to last month and last year (charts below table). While this month's report was strong on the top line, the individual components were mixed relative to October. As shown below, five showed increases led by New Orders and Production, while five declined led by customer inventories, which was the only component below 50 this month. Relative to last year, however, things are now a lot better in the Manufacturing sector. As shown below, not a single component is lower now than it was last year at this time, although Prices Paid is unchanged.
Perhaps the most notable aspect of this month's report was that while the headline reading came in better than expected, Prices Paid was weaker than expected. That kind of report is music to the Fed's ears. It also confirms several other reports in the last few weeks that indicate that inflation still remains in check.
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