Manufacturers Alliance/MAPI Analysis on ISM Index: Manufacturing Activity Decelerating

The following is an analysis from Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, regarding the ISM report from October 2011:

“The Institute for Supply Management (ISM) index was 50.8 percent in October 2011.  Any
index number above 50 percent indicates growth but the closer the number is to
50, the less growth has historically occurred,” Meckstroth said. “The ISM
report suggests that manufacturing activity is decelerating from the moderate
pace achieved in the third quarter. Manufacturing production increased at a 4
percent annual rate in the third quarter as measured by the Federal Reserve’s
industrial production index. 

“MAPI expects a deceleration to a 2 percent annual rate of growth in the final three
months of 2011, largely because of inventory rebalancing in the electronics and
motor vehicle industries which faced supply disruptions earlier in the year,”
he added.  “Pent-up demand for some consumer durables, rapid growth in
business equipment purchases, and the turning of the private construction cycle
should offset the weakening impact of the European debt crisis on U.S. trade.”