ISM stays above 50, thanks to lift from long wait times
|Manufacturing ISM was in expansion in February, but only barely so at 50.3. A jump in supplier deliveries kept the headline above 50. Three of the five components that feed into the headline were in contraction, and prices paid jumped to its highest since 2022. The ISM manufacturing index was in expansion if only barely so at 50.3, although a careful reading of the underlying components suggests this is hardly in an expansionary mood in the factory sector. New orders fell 6.5 points to 48.6, inventories remain in contraction at 49.9 and employment fell 2.7 points to return to contraction territory at 47.6 in February. These three components all feed into the headline index which was only able to boast a reading north of 50 by virtue of two other components. The production index fell 1.8 points, but was still expansionary at 50.7, but the real lift came from supplier deliveries which shot up to 54.5. This was the broadest indication of wait-times since the supply chain disruption year of 2022. Longer wait times for supplier deliveries are additive because in normal times such a development is associated with a factory sector that cannot keep up with demand. Since that is not an accurate characterization of what is contributing to wait times today, the "expansionary" signal from the ISM should, for this month at least, be taken with a massive grain of salt.Summary
Salvation in long wait times
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