ISM Data Suggests Light Concerns Over Prices, Employment, and Production

The Institute for Supply Management has released its purchasing managers index for January and the reading came in at 54.1.  This was a point higher than the 53.1 recorded in December and a tad shy of the Dow Jones consensus target of 54.5.

Prices paid showed a large jump, to 55.5 from 47.5 in December. The employment component showed a small drop to 54.3 from 54.8 in December.  New orders rose to 57.6 from 54.8 in December. There is another concern in a drop of production, down to 55.7 from 58.9 in December.  Inventories also rose to 49.5 from 45.5 in December.

This is close enough to estimates that the components won’t be overly scrutinized.  The problem areas show up in the employment and then again by the production and higher inventories.

Unfortunately, today’s ISM data is just hard to get excited about even above the 50.0 baseline.  Hopefully this does not fuel the inflation camp’s arguments to be a bit louder.  That might curb some expectations about future rate policy.

JON C. OGG