Econintersect is not a fan of surveys. The ISM surveys are improperly weighted opinion – and cannot be used to forecast where the economy is going. The headlines for June 2011 say things are up 1.8%.
The PMI registered 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month. New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent. The rate of increase in prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68 percent. This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5 percent. While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries.
If this opinion ends up reflecting hard data we will see in the coming months, backlog (which any manufacturer knows reflects this sector’s health) is contracting. New orders are not coming fast enough for the amount of employees.
This report is saying the economic soft spot continues. And the number of respondents who believe new orders are declining are at the highest level this year.