ISM suggests manufacturing growth has stalled

Following Friday’s anemic GDP number, the ISM survey suggests that manufacturing growth pretty much stalled last month.

The ISM Manufacturing Index, offered by the Institute for Supply Management, declined from 55.3 in June to 50.9 in July, well below the consensus from most analysts of around 54.



To make things worse, new orders turned negative – 51.6 to 49.2 – for the first time since June 2009 when the recession was officially declared to have ended. That suggests further weakness in the short term.

Employment remained positive but is decelerating – 59.9 to 53.5 – and given the weakness in the manufacturing sector, prices paid continued to recede, dropping from 68.0 to 59.0.

Following the downward revisions to GDP in Q4-10, Q1-11 and the weak growth we saw last quarter,  the poor showing by a key survey of manufacturing is clearly disturbing.

This once hot sector – and one of the few bright spots in the economy – has slowed dramatically.
The earthquake in Japan and the subsequent kink in the supply chain has played a role, but other factors are also weighing on growth.

Japanese industrial production, though not fully recovered, is growing at a decent pace, and that should help U.S. manufacturing, especially auto production.

I still believe we will avoid an outright recession this year, but we are perilously close to a growth recession – one in which the economy grows but unemployment rises (that’s already happening) and nonfarm payrolls fall.

ISM Manufacturing shows unexpected improvement

An unexpected rise in the ISM Manufacturing Index suggests the recent slowdown in the goods producing sector may be coming to an end.

The national look at manufacturing accelerated from 53.5 in May to 55.3 in June, the 23rd straight month of expansion.  A reading above 50 is an indication that manufacturing activity is moving ahead.



But the good news (a sigh of relief might be a better way to describe June’s increase) must be tempered by the fact that a jump in inventories was responsible for much of the gain – 48.7 to 54.1.
Nothing worrisome but worth noting.

New orders and production did rise slightly, suggesting stability, but the increase in inventories may hamper production down the road.

Meanwhile, costs are still a burden for most manufacturers.  Gasoline and a host of commodities have dropped in price but prices paid managed just a modest decline of 8.5 points to 68.0.

Despite the modest concern from some of the internals in the survey, stocks viewed the report in a favorable light and rallied following the release of the index.

All in all, today's report is just the latest indicating that the recovery still has legs.  Short legs, but nonetheless, we're still moving forward.

Jobless claims hold in narrow path

Weekly jobless claims fell 1,000 in the latest week to 428,000 and have now held in a very narrow range – 420,000 to 430,000 for six consecutive weeks. As a result, the 4-week moving average barely moved, rising by just 500 to 426,750.



The lack of any significant upward are downward movement in jobless claims, following a brief dip earlier in the year below 400,000, is telling us that the economy continues to slowly improve.

Based on the release as well as recent trends, no new recession is on the horizon but any pick up in economic growth is unlikely, either.

Simply put jobless claims are still elevated, underscoring the uncertainty many of us feel regarding what’s happening in the economy.

Despite the lack of any signs of an acceleration in economic activity, the Chicago Purchasing Managers Index, which looks at manufacturing activity in the Midwest, unexpectedly rose in the latest month.



A possible pick up in auto production tied to an easing of the supply chain disruption from Japan that followed the tragic earthquake that hit the nation earlier in the year might explain the welcome rise in the index.

Both production and new orders surged, while inventories tumbled.  Unfortunately, prices paid eased slightly but remained at a worrisome level, which is somewhat surprising given the recent fall in commodity prices.

Nonetheless, the Chicago PMI tends to be a rather volatile index, and other measures of regional manufacturing have slowed significantly.

We’ll get a better read when the ISM Manufacturing Index is released on Friday.

Philly Fed survey reveals additional weakness in manufacturing

Price pressures are moderating

Two relatively good reports today, now for the bad news.

Rounding out a very busy day of economic data (and for that matter, a very busy week and we still haven’t made it to Friday), the Philly Fed’s Index of Business Activity is signaling that the weakness that has cropped up in the once hot manufacturing sector is continuing into June.


Source: Philly Fed

The survey that looks at manufacturing in the mid-Atlantic region fell from 3.9 in May to –7.7 in June, the first negative reading since last September. A level of zero suggests the sector is neither expanding nor contracting.

New orders slipped into negative territory, while the future general activity index decreased 14 points this month and has now dropped 61 points over the last three months.

National manufacturing has been hurt by the supply chain disruptions brought on by the earthquake in Japan.

But autos and auto parts play a very small role in the mid-Atlantic region, as Goldman Sachs calculates the share of auto production in the region covered by the Philly Fed survey is just 1.1% and 1.9% for the Empire State – the New York survey – per MarketWatch.

In a reflection of weaker activity, prices paid fell from 48.3 to 26.8, and prices received, which is an indicator of how well manufacturers are able to pass along higher costs, dropped from 16.8 to 4.4.

Like the Empire survey, the slowdown in the economy is taking the focus away from inflation, especially as firms find it more difficult to boost prices.

And the apparent shift in pricing power away from manufacturers is occurring just as core inflation has begun to heat up.

Yesterday, the CPI increased by a modest 0.2%, but the core rate of inflation rose 0.3%, the first such rise in almost three years, as higher commodity prices begin to work their way into the broader price level.

The Fed believes any inflation will be transitory, as demand has not been robust and wages, the largest expense for most businesses, have been stable.

A look behind the latest industrial production figures suggests modest growth

Industrial production grew by just 0.1% in May following no gain in April. Capacity utilization held steady at 76.7% – yes, there’s still slack in the economy and that’s helping to minimize the impact higher commodity prices have had on inflation.

But looking behind the latest numbers, the sector is not fairing as poorly as the headline figures might suggest – or how the New York Fed’s survey indicated this morning.

Held down by falling utility production, manufacturing ex-energy grew by a respectable 0.5%, more than erasing April’s drop of 0.4%.

We’re continuing to see the lingering impact from the earthquake in Japan on the auto industry, but if we remove both energy and autos (that leaves us with almost two-thirds remaining) production increased by 0.6%, the best reading since January.

Overall, the data were encouraging.

More bad news on manufacturing

The Empire Manufacturing Index provides an early look at manufacturing during the current month. It’s a sliver of the sector since it deals with New York state only and it can be volatile, but again, it gets attention because it’s first.

Unfortunately, the sector received some bad news as the Empire survey showed the industry contracted for the first time since November 2010, falling from 11.9 in May to –7.8 in June.

Empire Manufacturing Index

Source: NY Fed

More bad news: new orders and shipments both fell sharply and both fell into negative territory.





About the only good news, which in essence is a reflection of weaker conditions, showed up in the prices portion of the report.


Source: NY Fed

Slower growth is relieving some of the upward pressure on commodities, and manufacturers are finding it increasingly difficult to pass along higher costs because of slower demand.

The ISM Manufacturing Index for May confirmed the sluggishness in the once hot sector and early signs from the current survey suggest continued weakness.

But this is a narrow look at goods producers, and we’ll get a better picture tomorrow when the Philly Fed survey is released.

ISM Manufacturing Index falls to lowest level in almost two years

Blame supply issues caused by the earthquake in Japan or the overall slowing in the U.S. recovery, but the closely-followed ISM Manufacturing Index fell a much larger-than forecast 6.9 points to 53.5, the lowest reading since September 2009 and confirming recent sluggishness in regional surveys.

A level above 50 suggests that manufacturing is expanding.



New orders, production and exports slowed significantly, signaling that further cooling is likely in the short-term, but the survey revealed that most manufacturers still believe that customer inventories are too low, mitigating some of the negativity from the report.

Prices paid did ease some, falling from 85.5 to a still-high 76.5.

Nonetheless, the larger-than-forecast slowdown in manufacturing is the latest piece of data to signal a continuation in the recent softness in economic activity.

Weekly jobless claims have been above 400,000 since early April, GDP growth in Q1 slowed to 1.8%, housing has been muddling along, and ADP said this morning that the economy created only 38,000 jobs in the private sector.

Now, manufacturing, which has been the lone bright spot in an otherwise dull economic outlook, is cooling, as Japanese supply-chain issues ripple across the Pacific. Wish there was better news to report this morning, but problems in Japan are likely to be temporary as rebuilding efforts gather steam later in the year.

Philly Fed points to slowdown in manufacturing

Following a weaker reading in the Empire Index out on Monday, the Philly Fed’s Business Activity Index slowed from 18.5 in April to 3.9 in May, its lowest reading since October.  A reading of zero indicates that manufacturing in the mid-Atlantic region is neither accelerating nor contracting.


















Source: Federal Reserve Bank of Philadelphia

Most of the subcomponents in the index declined, suggesting a broad-based slowdown is continuing into May.

New orders,  a proxy for future activity, fell from 18.8 to 5.4 and shipments slid from 29.1 to 6.5. Price pressures remain but receded amid the recent dip in commodity prices.

In the meantime, manufacturers are less optimistic going forward, according to the six-month outlook, with the index falling from 33.6 to 16.6.

Industrial production last month was unchanged, as the kink in the supply chain caused by the earthquake in Japan hit auto manufacturers last month.

Given the early look at May’s data, it appears that softness is the sector is continuing.

Jobless claims fall but remain elevated
Despite the recent spate of unsettling economic news, the second weekly decline in unemployment claims indicates that economic activity is not grinding to a halt.



Weekly initial jobless claims fell 29,000 in the latest week to 409,000, while the 4-week moving average edged up 1,250 to 439.000. Continuing claims slid 81,000 the 3.71 million.

Special factors that were not accounted for in the seasonal adjustments were responsible for the surge to 478,000 claims a couple of weeks ago.

Although the recent decline to the lowest reading in four weeks is reassuring, the elevated level – claims have been above 400,000 for six weeks – suggests the recent progress in the labor market may slow.

And the upward drift also implies the economy has hit a bump in the road.

Manufacturing remains strong, price pressures squeeze firms

The ISM Manufacturing Index slipped but held above 60 for the fourth-consecutive month, signaling that the manufacturing sector continues to fuel the economic recovery. Price pressures, however, remain a significant problem.

The closely-followed national gauge of goods producers dipped from 61.2 in March to 60.4 in April, topping the Bloomberg forecast of 59.5.  A reading above 50 suggests the sector is expanding.

The rate of growth in new orders and production also decelerated but held above 60 for the fifth-consecutive month.  And employment remained strong, as the Institute for Supply Management noted, “the first four months of 2011 are the highest readings in the last 38 years.”

Manufacturers, however, are now reporting their inventories are at comfortable levels, which could signal a deceleration in the coming months. Nothing worrisome, as a modest slowdown to a more sustainable rate of growth would be a healthy sign.

But surging prices at the early stages of production continue to bedevil manufacturers, as prices paid rose from 85.0 to 85.5.

Anecdotal evidence from the Fed’s Beige Book and comments by several major corporations in their Q1 earnings report reveal that higher input costs are forcing price hikes as pricing power begins to resurface, and core inflation has risen following extremely low levels in the second half of 2010.

The Federal Reserve had fretted in the middle of last year that inflation was hovering at uncomfortably low levels, raising the possibility the economy could slip into a deflationary spiral.

Soaring oil and commodity prices and QE2 have eliminated the outside possibility that falling prices might engulf the economy, and Fed Chief Ben Bernanke hinted at his press conference last week that the odds of another round of bond buys is very low.

Despite the worrisome rise in raw material prices, today’s upbeat report on manufacturing will ease worries that the economy might be slowing too quickly.

Friday’s employment  report

Attention will now turn to Friday’s labor report where economists surveyed by Bloomberg expect nonfarm payrolls to rise of 185,000 in April following a 216,000 increase in March.

Weekly jobless claims have unexpectedly jumped above 400,000 over the past three weeks and a weak payroll number would raise fears about the durability of the recovery, despite today’s upbeat manufacturing number.

But one month does not make a trend, and it seems likely that the slowdown in growth last quarter, as evidenced by the sluggish GDP number, is probably temporary.

Empire Manufacturing, prices push higher

The Empire Manufacturing Survey released by the New York Fed indicates that manufacturing conditions in New York state improved for the fifth consecutive month. But pricing pressures also intensified.

The index, which provides an early look at manufacturing conditions in April, increased from 17.5 in March to 21.7 in the current month. Moreover, new orders, which are a good proxy for future business conditions, shot up 17 points to 22.3. A reading above zero suggests production is expanding.



It’s safe to say that we still aren’t seeing much of an impact from the surge in gasoline prices, at least on a small portion of the economy.

Price pressures, however, have yet to abate, as both prices paid and prices received continued to accelerate.



Since the recovery began in June 2009, manufacturers have had little leeway in passing along higher prices, as the expansion has been anything but robust; however, as the second chart above shows, prices received has moved above zero, indicating the growing economy is allowing firms to shift some of the pricing burden to customers.

Separately, a look at today's release of the Consumer Price Index for March is available at Examiner.

ISM manufacturing remains at healthy level but prices are a rising concern

The ISM Manufacturing Index, which is a closely-followed survey of national manufacturers, slipped from a cyclical high of 61.4 in February to a still healthy 61.2 in March, roughly in line with most analysts’ forecasts.  But the cost of raw materials remains a concern.

A reading of 50 suggests that goods producers are neither expanding nor contracting.

" The component indexes of the PMI remain at very positive levels and signal strong sector performance in the first quarter. While manufacturers are benefiting from strength in new orders and production, there is significant concern with regard to commodity prices,” Norbert Ore, chair of the Institute for Supply Management said.

“Many manufacturers indicate the prices they have to pay for inputs are rising, and there is concern about the impact of higher prices on their margins."

He states his case well. 

Prices paid jumped from an already high 82.0 in February to 85.0, signaling that manufacturers continue to grapple with the high costs of materials.   And regional surveys of the manufacturing landscape suggest firms are starting to have some success passing along higher prices.

Nonetheless, wages gains have been muted and excess slack still exists in the economy, which should limit shortages and bottlenecks and help keep core inflation under control, at least in the short term.

Meanwhile, manufacturers continue to enjoy a very robust recovery.

Production rose 2.7 points to a very strong 69.0, while a modest slowdown in new orders to a still solid 63.3 suggests that the rapid ascent in the recovery is peaking, and we may be settling into a strong but sustainable recovery in the goods-producing sector.

Overall, the manufacturing sector, which helped to pull the U.S. economy out of the worst recession in 70 years, continues to lead the expansion.

ISM Manufacturing Index at best reading in nearly 7 years

As the recovery picks up steam, manufacturing remains the leader and continues to fuel economic growth according to the latest survey by the Institute for Supply Management.

The closely-followed ISM Manufacturing Index increased from 60.8 in January to 61.4 in February, its highest reading since May 2004 and the seventh consecutive month that activity has accelerated.  A level above 50 suggests manufacturing in the U.S. is expanding.



New orders and production remain at very strong levels (68.0 and 66.3, respectively).

With orders rising and survey respondents continuing to report that customer inventories are too low (falling 5.5 points to 40.0), the outlook in the manufacturing sector is likely to remain very upbeat.

Meanwhile, hiring improved from already robust levels, as the employment index increased by 2.8 points to 64.5, the best reading in almost 40 years according to Bloomberg News.

Inflation building?
About the only cloud on the horizon for goods producers is the high cost of raw materials, as the prices paid component held above 80..  Since commodity prices remain high and demand continues to rise, don’t expect any relief on the pricing front anytime soon.

But there is still plenty of slack in the economy, which limits pricing power (unlike regional survey, the ISM index does not measure prices received), and capacity utilization remains well below levels that would suggest inflation might become an immediate problem.

Moreover, the ThomReuters/Jefferies CRB Index, which is an index that measures the price of 19 commodities, is well off the bottom reached in early 2009 but remains well below the peak hit in July 2008.


(Source: Bloomberg)

Still, if demand remains strong, producers will eventually gain the upper hand and start to pass along higher costs, and retail prices could become an issue that the Fed will have to deal with.

Chicago PMI reflects red-hot manufacturing sector

As the recovery begins to broaden, manufacturers, which helped to stabilize and pull the economy out of the worst recession since the 1930s, continue to expand at an ever-quickening pace, at least according to the Chicago Purchasing Managers’ survey.

The Chicago PMI, increased from 68.8 in December to 71.2 in January, the highest reading since July 1988.  A reading of 50 suggests manufacturing is neither expanding nor contracting.



Even better, new orders – a proxy for future activity – edged up from 75.7 to 75.9, the best reading since December 1983!  Meanwhile, production grew by 5.5 points to the torrid pace of 78.2, and employment, which eased from a 27-year high, remained favorable.

However, the fast-paced expansion in manufacturing has not been without some problems, as growth continues to boost prices at the early stages of production and crimp profit margins.

The Chicago PMI, which looks at manufacturing in the Midwest, tends to be a bit more volatile than the closely-followed ISM Manufacturing Index, which measures production on a national level.

Still, a reading of over 70 is loudly suggesting that manufacturing is firing on all cylinders, and components within the index are signaling the all-clear sign in the short term.

ISM reveals that manufacturing is leading the way

The ISM Manufacturing Index rose 2.3 points in January to 60.8, the best reading since May 2004.

I provide details in my report on Examiner.com and just wanted to offer a few insights here.



Output at the nation's factories are improving at a significant rate, according to the data released in the closely-followed survey.

Following the unusually upbeat internals in the advance 4Q GDP report, a strong finish to 2010 in consumer spending and a reading by the ISM in excess of 60, it becomes very difficult to argue that the economy is not entering into a more robust recovery.

There are still uncertainties that exist, including weakness in housing, debt worries overseas (and of course, fears those worries could wash up on our shores), and a reluctance among banks to lend.

But the growing economy seems likely to spark a rise in hiring, which should put the recovery on a self-sustaining path.  The $64,000 question: when will this occur.  We’ve seen strong gains in the ADP Employment Report over the past couple of months, but government data have yet to confirm such a surge.

ISM shows manufacturing moving along at decent pace

The Institute for Supply Management reported that the ISM Manufacturing Index increased from 56.6 in November to 57.0 in December.

Though just below expectations and not nearly as robust as the more volatile Chicago PMI, today’s number shows that manufacturing continues to expand at a healthy clip and impressive gains in production and new orders suggest further improvement early next year.



In its press release, the ISM noted, "The recovery centered on strength in autos, metals, food, machinery, computers and electronics, while those industries tied primarily to housing continue to struggle.

“Additionally, manufacturers that export have benefitted from both global demand and the weaker dollar. December's strong readings in new orders and production, combined with positive comments from the panel, should create momentum as we go into the first quarter of 2011."

Manufacturing has been and continues to be a bright spot in a tepid recovery that began in the middle of 2009.  The service sector, which makes up the bulk of economic activity, has lagged as the chart below indicates, though the sector has been expanding for about a year.  Wednesday’s release is expected to show another increase.



Recently, the bulk of economic indicators suggest that growth is accelerating, including today’s manufacturing report, a dip in weekly jobless claims below 400,000, recent gains in the Leading Economic Index and the strengthening stock market.

In addition, the just-extended Bush tax cuts, coupled with a partial payroll tax holiday, should aid the economy in the coming months.

Strong Chicago PMI, drop in jobless claims below 400,000 point to upbeat start to 2011

The Chicago PMI, which measure activity among manufacturers in the Midwest, jumped from 62.5 in November to 68.6 in December, the best showing since July 1988 and the fourth month in a row the survey detected accelerating activity.

A reading of 50 suggests manufacturing activity in the region is neither expanding nor contracting.



Adding to the very strong report, production and new orders, which rose to a very impressive 74.0 and 73.6, respectively, now stand at their highest levels in over five years, while order backlogged are surging.

Further, employment also touched a five year high, while prices paid increased from 70.7 to 78.2, signaling that manufacturers are being forced to paid higher prices for raw materials amid improving worldwide demand.

Comments from some of those survey also paint a brighter 2011 and include :

1. 2010 was a very, very good year, 2011 looks just as strong thru Q1! 
2. The level of business keeps increasing and the resources to handle are not available.
3. Our backlog is increasing. Supplier lead times are still too long.
4. Employee turnover is starting to increase, this along with continued downsizing and increased outsourcing is driving consultant hiring.
5. Lending market slowly thawing but only for strong (financially) borrowers. Weak borrowers are still finding it nearly impossible to find a competitive source of reliable funding.

No doubt about it, the Chicago PMI tends to be a bit volatile when compared to the ISM Manufacturing Index, which takes a snapshot of the national picture.  But with the Philly Fed Business Activity Index reaching a six-year high in December, along with strong numbers from Chicago, it looks as if manufacturing is growing nicely and is set to support the broadening recovery.

Jobless claims finally tumbled below 400,000

In the meantime, weekly initial jobless claims fell a steep 34,000 to 388,000, the best reading since July 2008.  The 4-week moving average dropped a sizable 12,500 to 414,000.  I provide details at Examiner.com.



Difficulties in adjusting for seasonality, especially during the year-end holidays, may be responsible for the unexpectedly large decline; however, Bloomberg News reported that the Labor Department believes the data are good, and it was able to accurately adjust for seasonal variations.

If this proves to be true, then the drop below 400,000 is significant and is one of the strongest signals yet that economic activity is picking up.  Moreover, it suggest that an improving labor market may not be far behind.

Consequently, the new year may finally offer some much needed economic relief to the many who grew weary of the recession and the slow recovery long ago.

Jump in farm products distorts wholesale inventories

A 26% rise in farm products, as well as big increases in petroleum and chemical inventories, led a huge 2.2% rise in wholesale inventories in October.  Similar increases in farm and petroleum sales resulted in a strong 1.9% rise in overall sales.  But the jump was most likely due to rising prices, which raised the value both inventories and sales.

Still, durables on hand increased a modest 0.5%, while sales grew a stronger 0.9%, indicating that production and demand remain on an upward path.

Meanwhile, the inventories-to-sales ratio held at a lean 1.18, which means that at the current sales pace it would take 1.18 months to liquidate all stockpiles.

With demand rising, we will probably see further increases in production, which should help to support the economic recovery through the end of the year and into 2011.

ISM Manufacturing survey reveals steady growth

ADP has best employment reading in three years

The ISM Manufacturing Index, which is a national measure of manufacturing, fell from 56.9 in October to 56.6 in November and remained above 50, which marks the line between expansion and contraction, for the 19th consecutive month.



"The manufacturing sector grew during November, with both new orders and production continuing to expand. With the PMI at 56.6 percent, November's rate of growth is the second fastest in the last six months. Exports and imports continue to support expansion in the sector,” the chair of the Institute for Supply Management said.

He added, “Prices moderated slightly during the month, but comments from the respondents express concerns with regard to pricing pressures.”

Manufacturing has been the bright spot in what has otherwise been an uneven and dull economic recovery so far.

However, recent indications suggest that the uneven recovery is beginning to broaden.

ADP report reveals favorable job trend
ADP announced this morning that private-sector employment increased by 93,000 in November, noting that the report suggests and acceleration in job creation and that “the nation’s employment situation is brightening somewhat.”

October’s originally reported gain of 43,000 was revised upward to 82,000, adding to the positive flavor of the release.

The best increase in three years, however, is not enough to bring down the unemployment rate, as ADP was quick to point out that the unemployment rate will likely hold above 9% for all of 2011.

Still, the report, which front runs the government’s labor report by two days, has lagged well behind the nonfarm payroll number for the entire year, and November’s relatively upbeat number is suggesting that Friday’s labor report might pleasantly surprise to the upside. 

At a minimum, last month’s rise is signaling that the recovery is beginning to pick up steam, as companies begin to fill vacancies needed to take advantage of improving markets.

Philly Fed Index continues string of data showing improvement

The Philly Fed Index, which takes a look at manufacturing conditions in the mid-Atlantic region, is showing a noticeable improvement in economic activity, as the survey released by the Philadelphia Federal Reserve jumped from 1.0 in October to 22.5 in November, the best reading in a year.


(Source: Philadelphia Federal Reserve)

New orders moved back into positive territory, rising from –5.0 to 10.4, suggesting further gains in production, while shipments jumped for 1.5 points to 16.8.

The acceleration in activity also had favorable impact on hiring, which increased from 2.4 to 13.3.

However, rising demand around the globe, especially in China and other emerging markets, coupled with the re-introduction of quantitative easing by the Fed, is keeping upward pressure on raw material prices.

Prices paid rose 2.5 points to 34.0.  But the still-sluggish U.S. recovery is making it difficult to pass along higher commodity prices, as evidenced by a –2.1 reading on the prices received component.

Looking at the chart above, the summer soft patch has faded.  Just as important, the improvement in the Philly Fed signals that the weakness we saw in the more volatile and narrow Empire Manufacturing Index was very likely an aberration.

Expect the economy to gradually improve heading into the end of the year.

Volatile Empire Index sinks into negative territory

The Empire Manufacturing Index, which is a narrow but early look at manufacturing and focuses only on New York state, fell 27 points to -11.1. The new orders index plummeted 37 points to -24.4, and the shipments index also fell below zero.


Surprisingly, given the sharp increases in many commodity prices, the prices paid index fell 8 points to 22.1, suggesting that the pace of price increases slowed in November. The prices received fell 11 points to -2.6—a sign of slight downward pressure on selling prices.

As already mentioned, this index tends to be fairly volatile, which can be seen by the chart above provided by the New York Fed.

The global economy has been improving and U.S. exports are gaining traction.  And most other U.S. economic indicators, including the six-month outlook that is part of this survey, continue to flash cautiously optimistic signs.

Unless confirmed by other data, this report is an outlier and should be ignored this month, in my opinion.