The ISM Manufacturing Index increased from 53.8 to 56.6; exports and production rose, and prices retreated. Any reading over 50 indicates growth, and the overall index has been above 50 for 26 months. The ISM Global Manufacturing Index increased as well, to a nine month high of 53.4. The ISM Non-manufacturing Index still shows robust growth, with the index at 60.5, although it is down from the prior month’s 62.2. This index showed greater pricing pressures, though it may lag the price pressures of the manufacturing index by a month or so.

June 2005 printing shipments were down -$94 million compared to June 2004 shipments. On an inflation-adjusted basis, they were down by -$334 million. For the first six months of the year, shipments are up +$254 million in current dollars, but down -$1.1 billion on an inflation-adjusted basis. On the bright side, May's shipments were revised up by +$18 million in current dollars. The revisions are something I watch very carefully, and to date the revision amount is a miniscule -0.0015%, with the total of all revisions to date being -$7 million. In the grand statistical scheme of things, that is nothing, although if someone stuffed $7 million in my pocket in error, I would certainly not refuse it.

The current-dollar versus inflation-adjusted dollar issue concerns me. Executives looking at unadjusted dollars would look at the data and say the trend is flat, when it is not. I’ve also warned that headline GDP data are always presented in real terms, not current terms. That is, if managers think they are keeping up with the economy by growing +3.8%, they are wrong. They need to grow +6.5 to 7% to keep up with economic growth if they do not adjust prior year dollars for inflation.