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U.S. Department of Commerce Makes Annual Adjustments
to Seasonal Factors for ISM Manufacturing PMI and Diffusion Indexes
and ISM Non-Manufacturing NMI and Diffusion Indexes

FOR RELEASE: January 31, 2012

Contact: Rose Marie Goupil
  ISM, ROB Media Relations
  Tempe, Arizona
  800/888-6276, Ext. 3015
  rgoupil@ism.ws


(Tempe, Arizona) — The U.S. Department of Commerce recently completed its annual adjustment to the seasonal factors used in the monthly Institute for Supply Management™ (ISM) Manufacturing Report On Business® and the monthly Institute for Supply Management™ (ISM) Non-Manufacturing Report On Business®. Economists and managers who track these indexes will note these changes are effective with the January 2012 ISM Manufacturing Report On Business®, which is scheduled to be released on February 1, 2012, and the January 2012 ISM Non-Manufacturing Report On Business®, which will be released on February 3, 2012.

Seasonal adjustment factors are used to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-movable holidays. It is standard practice to project the seasonal adjustment factors used to calculate the indexes one year ahead (2012).

This year's seasonal factor revisions include greater attention to two areas: series with marginal seasonality and with improved outlier detection. Due to this focus, the Department of Commerce recommended that ISM no longer seasonally adjust the ISM Manufacturing Inventories Index. Additionally, they recommended making revisions to all seasonally adjusted data for a longer time period than what ISM has typically done in the past.

In response to concerns that the unusually large declines in autumn 2008 associated with the recent recession that may not have been adequately handled with default settings, this year the Department of Commerce used lower thresholds (critical values) for detecting outliers. As a result of moving averages, these changes in outlier detection affected seasonal factors both before and after 2008; therefore, ISM is making revisions to seasonally adjusted data for the past seven years rather than the customary four-year period.

The X12-ARIMA program was used to develop the revisions to the Manufacturing and Non-Manufacturing indexes for 2005 through 2011, as well as the 2012 projected seasonal factors. The 2012 seasonal factors will be recomputed when the actual data are known in early 2013. Projected seasonal factors for 2012 and revised seasonally adjusted indexes are shown below, followed by charts tracking both the former and the revised PMI for Manufacturing and Business Activity Index for Non-Manufacturing.




2012 Seasonal Adjustment Factors for ISM Manufacturing Indexes

(Prepared by G. McKittrick, Economist, U.S. Department of Commerce, 202/482-2343)

  New
Orders

Production

Employment
Supplier
Deliveries
Jan 2012 0.999 0.960 0.966 0.952
Feb 2012 1.083 1.085 1.033 0.979
Mar 2012 1.110 1.038 1.007 1.051
Apr 2012 1.117 1.107 1.065 1.016
May 2012 1.024 1.071 1.046 1.048
Jun 2012 1.057 1.059 1.016 1.032
Jul 2012 0.948 0.936 1.009 1.048
Aug 2012 0.976 1.006 0.998 1.024
Sep 2012 0.975 0.989 0.960 1.014
Oct 2012 0.877 0.936 0.989 0.967
Nov 2012 0.944 0.922 0.961 0.945
Dec 2012 0.924 0.912 0.949 0.923

To compute the PMI:

1)  Calculate the unadjusted diffusion index for New Orders, Production, Employment and Inventories to two decimal places (percent higher or up plus one half of the percent same or unchanged). For Supplier Deliveries, it will be percent slower plus one half of the percent same or unchanged.

2)  Divide each unadjusted diffusion index by its seasonal factor (round to one decimal place). Note: As of January 2012, the ISM Manufacturing Inventories Index is no longer seasonally adjusted.

3)  Add all five index numbers together and divide by five.

To compute other indexes, follow steps #1 and #2 above for each indicator.


2012 Seasonal Adjustment Factors for ISM Non-Manufacturing Indexes

  Business
Activity
New
Orders

Employment

Prices
Jan 2012 0.924 0.951 0.888 0.992
Feb 2012 0.958 0.980 0.969 1.002
Mar 2012 1.078 1.046 1.006 1.080
Apr 2012 1.090 1.084 1.079 1.139
May 2012 1.053 1.055 1.113 1.104
Jun 2012 1.064 1.041 1.090 1.033
Jul 2012 0.961 0.966 1.064 0.993
Aug 2012 0.954 0.968 0.966 0.941
Sep 2012 0.993 0.980 0.969 0.932
Oct 2012 0.984 0.977 0.920 0.900
Nov 2012 0.956 0.990 0.974 0.948
Dec 2012 0.986 0.962 0.960 0.937

To compute the NMI:

1)  Calculate the unadjusted diffusion index for Business Activity, New Orders and Employment to two decimal places (percent higher or up plus one half of the percent same or unchanged). For Supplier Deliveries, it will be percent slower plus one half of the percent same or unchanged.

2)  Divide each unadjusted diffusion index by its seasonal factor (round to one decimal place).

3)  Add all four index numbers together and divide by four.

To compute other indexes, follow steps #1 and #2 above for each indicator.


Revised Manufacturing Seasonally Adjusted Indexes 2005-2011

  PMI New
Orders
Production Employment Supplier
Deliveries
Inventories*
Jan 2005 56.8 57.9 59.3 58.6 54.7 53.5
Feb 2005 55.5 55.9 58.2 56.0 56.5 51.0
Mar 2005 55.2 57.7 57.5 52.5 53.5 55.0
Apr 2005 52.2 53.4 54.2 53.0 51.8 48.5
May 2005 50.8 51.8 54.7 49.3 49.8 48.5
Jun 2005 52.4 55.7 55.1 51.1 52.0 48.0
Jul 2005 52.8 57.2 57.4 53.2 50.8 45.5
Aug 2005 52.4 57.8 55.6 51.8 49.9 47.0
Sep 2005 56.8 60.9 62.4 53.4 57.7 49.5
Oct 2005 57.2 61.4 62.1 54.3 61.8 46.5
Nov 2005 56.7 61.2 62.4 56.0 57.0 47.0
Dec 2005 55.1 60.1 60.3 53.7 54.9 46.5
 
Jan 2006 55.0 58.9 59.7 53.1 55.7 47.5
Feb 2006 55.8 61.0 57.9 53.5 54.4 52.0
Mar 2006 54.3 57.0 57.0 53.8 53.9 50.0
Apr 2006 55.2 55.7 57.1 54.2 57.4 51.5
May 2006 53.7 54.9 56.0 53.2 56.1 48.5
Jun 2006 52.0 55.0 53.4 49.9 54.0 47.5
Jul 2006 53.0 55.8 56.9 50.7 53.5 48.0
Aug 2006 53.7 55.3 55.2 52.6 54.2 51.0
Sep 2006 52.2 54.8 56.2 49.9 52.9 47.0
Oct 2006 51.4 54.1 54.3 49.6 51.3 47.5
Nov 2006 50.3 50.8 50.7 49.2 53.1 47.5
Dec 2006 51.4 51.4 52.7 49.8 55.7 47.5
 
Jan 2007 49.5 52.2 51.2 50.3 53.1 40.5
Feb 2007 51.9 55.1 53.8 50.9 52.8 47.0
Mar 2007 50.7 50.2 53.1 49.9 51.2 49.0
Apr 2007 52.6 57.4 56.2 51.9 50.3 47.0
May 2007 52.5 58.6 56.2 52.2 49.3 46.0
Jun 2007 52.6 57.7 59.5 51.9 48.9 45.0
Jul 2007 52.4 58.6 57.0 49.8 50.0 46.5
Aug 2007 50.9 54.4 54.3 50.0 49.2 46.5
Sep 2007 51.0 54.4 56.3 52.0 50.7 41.5
Oct 2007 51.1 56.4 51.3 50.7 51.6 45.5
Nov 2007 50.5 52.4 53.7 48.4 52.4 45.5
Dec 2007 49.0 46.5 49.2 48.6 56.0 44.5
 
Jan 2008 50.3 48.0 53.7 47.1 53.8 49.0
Feb 2008 47.6 46.4 47.4 45.8 51.6 47.0
Mar 2008 48.3 45.6 48.3 48.2 52.7 46.5
Apr 2008 48.8 46.5 48.3 46.6 53.8 49.0
May 2008 48.8 48.5 49.4 46.1 52.2 48.0
Jun 2008 49.8 49.7 50.7 44.8 53.9 50.0
Jul 2008 50.0 47.0 54.6 51.2 53.3 44.0
Aug 2008 49.2 46.7 50.4 48.9 49.3 50.5
Sep 2008 44.8 41.8 45.4 42.1 51.6 43.0
Oct 2008 38.9 33.2 33.6 33.7 50.3 43.5
Nov 2008 36.5 27.6 32.4 34.4 49.7 38.5
Dec 2008 33.1 23.2 26.3 29.9 48.1 38.0
 
Jan 2009 34.9 31.4 30.1 29.2 46.0 38.0
Feb 2009 35.6 32.9 35.0 25.3 46.7 38.0
Mar 2009 36.0 40.0 36.1 28.4 42.4 33.0
Apr 2009 39.8 46.8 39.4 33.8 44.7 34.5
May 2009 42.0 50.1 43.9 34.3 48.9 33.0
Jun 2009 45.8 51.3 55.1 41.4 50.0 31.0
Jul 2009 49.2 56.9 59.5 45.8 51.3 32.5
Aug 2009 53.5 65.3 63.2 47.2 55.7 36.0
Sep 2009 54.2 64.0 59.8 47.8 58.0 41.5
Oct 2009 55.9 59.5 63.2 52.3 58.1 46.5
Nov 2009 54.3 60.7 62.7 51.0 57.5 39.5
Dec 2009 55.8 64.6 61.2 52.0 59.6 41.5
 
Jan 2010 56.7 60.6 63.0 53.6 60.3 46.0
Feb 2010 55.8 57.5 57.2 54.4 60.8 49.0
Mar 2010 59.3 61.4 62.1 55.3 61.2 56.5
Apr 2010 59.0 64.5 64.1 56.4 59.4 50.5
May 2010 58.8 66.1 64.3 58.2 59.3 46.0
Jun 2010 56.0 59.3 61.2 56.6 56.7 46.0
Jul 2010 55.7 54.9 57.9 58.7 58.1 49.0
Aug 2010 57.4 55.6 61.2 60.7 56.4 53.0
Sep 2010 56.4 54.5 59.3 58.3 53.8 56.0
Oct 2010 57.0 58.7 62.0 58.4 53.1 53.0
Nov 2010 58.0 57.8 59.2 59.6 59.5 54.0
Dec 2010 57.3 59.0 60.8 57.9 58.6 50.0
 
Jan 2011 59.9 63.8 63.5 60.7 59.3 52.0
Feb 2011 59.8 62.7 64.4 61.1 60.1 50.5
Mar 2011 59.7 61.9 65.9 62.1 59.8 49.0
Apr 2011 59.7 62.7 60.8 60.6 59.7 54.5
May 2011 54.2 55.0 54.6 58.3 54.4 48.5
Jun 2011 55.8 53.6 55.9 61.0 55.2 53.5
Jul 2011 51.4 50.8 52.5 55.1 50.6 48.0
Aug 2011 52.5 51.8 51.5 53.6 51.2 54.5
Sep 2011 52.5 51.1 52.5 55.2 51.6 52.0
Oct 2011 51.8 53.4 52.7 54.0 52.2 46.5
Nov 2011 52.2 55.0 55.7 52.4 51.3 46.5
Dec 2011 53.1 54.8 58.9 54.8 51.5 45.5

*The ISM Manufacturing Inventories Index is no longer seasonally adjusted as of January 2012.

The revised breakeven point for the overall economy is a PMI of 42.6 percent. A PMI over 42.6 percent indicates an expanding overall economy. A PMI below 42.6 percent indicates the overall economy is declining.


Revised Non-Manufacturing Seasonally Adjusted Indexes 2005-2011

  NMI Business
Activity
New
Orders
Employment Prices
Jan 2005   62.5 62.4 54.6 69.1
Feb 2005   61.9 63.3 59.7 69.7
Mar 2005   61.3 60.5 57.2 65.6
Apr 2005   58.6 57.5 53.3 62.4
May 2005   57.5 58.2 51.8 57.6
Jun 2005   60.7 59.2 55.8 58.4
Jul 2005   61.3 64.4 55.1 65.8
Aug 2005   64.8 65.3 60.2 66.1
Sep 2005   55.2 56.2 55.4 83.5
Oct 2005   59.2 57.5 54.2 79.2
Nov 2005   59.2 59.6 56.9 72.6
Dec 2005   60.1 62.8 56.4 68.9
 
Jan 2006   58.6 57.4 54.5 69.9
Feb 2006   61.8 57.8 58.1 67.8
Mar 2006   60.0 58.6 55.1 60.1
Apr 2006   61.3 61.1 56.5 68.5
May 2006   58.1 58.6 54.6 70.5
Jun 2006   56.4 57.0 51.2 69.0
Jul 2006   56.3 58.1 53.6 70.6
Aug 2006   56.7 53.1 52.2 72.2
Sep 2006   54.4 56.5 52.9 60.6
Oct 2006   56.9 55.3 52.9 56.5
Nov 2006   59.2 56.7 52.2 56.7
Dec 2006   56.1 54.8 52.7 60.5
 
Jan 2007   58.3 55.6 54.8 56.8
Feb 2007   56.0 55.7 52.7 54.7
Mar 2007   52.8 53.2 51.9 61.9
Apr 2007   56.1 54.9 51.1 62.1
May 2007   58.1 57.1 52.2 63.2
Jun 2007   60.1 57.2 53.3 61.9
Jul 2007   57.1 54.5 51.1 60.3
Aug 2007   55.7 56.7 48.3 59.9
Sep 2007   54.2 52.6 52.5 68.6
Oct 2007   55.1 55.3 53.6 69.2
Nov 2007   55.7 51.9 51.6 75.3
Dec 2007   53.2 52.5 51.8 73.4
 
Jan 2008 45.0 41.9 43.3 45.7 71.4
Feb 2008 49.9 52.2 50.1 47.3 68.8
Mar 2008 49.4 51.7 49.3 47.4 69.8
Apr 2008 51.8 51.1 50.3 49.7 70.8
May 2008 51.4 53.3 54.2 47.2 75.0
Jun 2008 48.3 50.2 49.2 43.4 79.7
Jul 2008 50.0 51.0 49.0 46.3 78.3
Aug 2008 50.6 51.1 50.7 45.2 74.8
Sep 2008 49.4 50.4 49.5 44.3 72.4
Oct 2008 44.7 43.8 44.1 42.8 56.3
Nov 2008 37.6 34.2 35.3 31.5 37.3
Dec 2008 40.0 38.3 38.7 34.9 36.8
 
Jan 2009 43.3 44.4 40.7 36.4 42.0
Feb 2009 41.7 41.2 40.3 37.3 47.0
Mar 2009 40.2 43.1 37.6 32.2 38.4
Apr 2009 43.5 45.0 47.0 36.6 39.2
May 2009 44.3 43.0 46.1 38.0 46.3
Jun 2009 46.5 49.4 49.3 41.4 52.7
Jul 2009 46.9 47.2 49.2 41.0 41.7
Aug 2009 48.9 51.8 51.4 43.3 58.8
Sep 2009 50.2 53.6 53.1 44.2 54.1
Oct 2009 50.7 54.5 55.3 42.4 56.0
Nov 2009 49.2 51.3 54.4 42.4 58.4
Dec 2009 49.9 52.4 51.7 44.9 59.9
 
Jan 2010 50.5 52.2 53.3 46.1 60.5
Feb 2010 52.3 54.3 53.6 47.6 57.7
Mar 2010 53.8 57.8 59.2 48.6 58.7
Apr 2010 54.8 59.3 57.6 48.9 62.0
May 2010 55.2 60.7 57.8 49.1 58.9
Jun 2010 54.0 58.9 55.6 48.6 56.1
Jul 2010 54.5 57.8 57.7 50.4 56.1
Aug 2010 52.4 55.6 54.0 49.0 58.7
Sep 2010 53.5 53.3 55.2 50.5 64.0
Oct 2010 55.0 59.2 57.8 51.8 71.7
Nov 2010 55.9 58.8 58.6 53.8 64.7
Dec 2010 57.2 62.2 62.5 52.5 69.7
 
Jan 2011 58.3 62.4 63.2 54.1 71.9
Feb 2011 59.0 65.4 62.8 55.8 70.9
Mar 2011 56.3 58.6 60.9 54.3 68.9
Apr 2011 54.4 56.0 55.3 53.3 68.3
May 2011 54.5 54.5 55.9 53.6 67.2
Jun 2011 53.3 54.5 53.7 52.8 61.5
Jul 2011 53.4 57.2 53.3 52.7 60.6
Aug 2011 53.8 56.4 53.6 52.2 62.1
Sep 2011 52.6 56.8 56.2 47.9 64.8
Oct 2011 52.6 53.3 52.7 52.3 61.0
Nov 2011 52.6 56.1 54.1 50.3 62.2
Dec 2011 53.0 55.9 54.6 49.8 62.0

Beginning in January 2008, ISM began calculating a composite index for the Non-Manufacturing sector (NMI).


Charts Illustrating Former and Revised Indexes

Manufacturing PMI Chart: 2005-2011


Non-Manufacturing Business Activity Chart: 2005-2011

The ISM Report On Business® is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by top government agencies and economic and business leaders for its timely, accurate information. The Manufacturing and Non-Manufacturing ISM Reports On Business® are published monthly by the Institute for Supply Management™. Each month, both reports are compiled from responses to questions asked of purchasing and supply executives across the country and reflects change, if any, in the current month compared to previous months. As the oldest and largest supply management institute in the world, the mission of the Institute for Supply Management™ (ISM) is to lead supply management. By executing and extending its mission through education, research, standards of excellence, influence building and information dissemination — including the renowned monthly ISM Report On Business® report — ISM continues to extend the global impact of supply management. ISM's membership base includes more than 40,000 supply management professionals in 75 countries. Supply management professionals are responsible for trillions of dollars in the purchases of products and services annually. ISM is a member of the International Federation of Purchasing and Supply Management (IFPSM).



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