–Retransmitting 12:35 Story, Recasting Lead Paragraph
–’Has This Changed the Seasonal Factors? It’s Possible.’
By Mark Pender
NEW YORK (MNI) – October’s great surge in new orders upgrades the
outlook for the PMI to a more gradual downward slope, according to
Norbert Ore who heads the Institute For Supply Management’s
“With new orders strengthening the way they have, the PMI should
hold up in the 54 to 52 area over the next several months,” Ore said in
a telephone interview with MNI.
The 2-1/2 point jump to 56.9 for the PMI, which had slowed in four
of the five prior months, is a surprise for Ore who had thought the
sector’s recovery was in a mature phase of slowing month-to-month
A 7.8 point jump in new orders to 58.9 is well beyond any similar
monthly gain in the last cycle when the index gradually eased to the low
50 area before its late 2007 plunge.
Exports were particularly strong in October, the result Ore
attributes to the competitive dollar. General demand for computers and
related goods was especially strong evidenced by short supply for
The auto sector, where activity was particularly strong, is the
month’s wildcard. Ore cautions that the push-back in this year’s auto
retooling to August from July may have pushed back resumption of auto
and auto-related production.
“Has this changed the seasonal factors? It’s possible,” Ore said.
Ore’s looking for the strength in new orders to translate over the
next few months into gains for non-manufacturing employment.
“There’s been no improvement on the non-manufacturing side. We
should start to see it crossing over manufacturing. That would be a
signal of solid recovery,” said Ore who has no prior access to the ISM
Anomalies in the report include improvement in delivery times which
Ore attributes to pre-established shipping schedules for raw materials.
He has no explanation for a slowdown in imports.
Ore suspects a second month of contraction for backlogs could be
noise though he does note that production held strong and steady in
prior months even while new orders were slowing, suggesting
manufacturers may have cut into backlogs by extending production of
standard product lines.
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