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

TEMPE, Ariz.--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 2007 ISM Manufacturing Report On Business^®, which is scheduled to be released on February 1, 2007, and the January 2007 ISM Non-Manufacturing Report on Business^®, which will be released on February 5, 2007.

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 a year ahead (2007).

The X12-ARIMA program was used to develop the revisions to the indexes for 2003 through 2006 as well as the 2007 projected seasonal factors for Manufacturing. For the Non-Manufacturing Report, these indexes have been revised from 2003 through 2006 also. The 2007 seasonal factors will be recomputed when the actual data are known in early 2008. Projected seasonal factors for 2007 and revised seasonally adjusted indexes for 2003-2006 are below.

As part of the Department of Commerce’s annual review, the Manufacturing Export Orders series will no longer be seasonally adjusted, effective with the January 2007 seasonal adjustments.

2007 Seasonal Adjustment Factors for ISM Manufacturing Indexes
(Prepared by G. McKittrick, Economist, U.S. Department of Commerce, 202/482-2343)
		New						Supplier
		Orders		Production		Employment		Deliveries		Inventories
January 2007		0.984		0.977		0.970		0.967		1.015
February 2007		1.047		1.017		1.018		0.994		1.054
March 2007		1.075		1.048		1.026		1.003		1.032
April 2007		1.069		1.065		1.036		1.006		1.015
May 2007		1.007		1.020		1.060		1.024		0.998
June 2007		1.012		0.994		1.037		1.017		0.994
July 2007		0.992		0.971		0.996		1.009		0.959
August 2007		0.959		0.963		0.965		1.020		1.024
September 2007		1.020		1.053		0.968		1.001		0.998
October 2007		0.953		0.968		0.962		0.999		0.964
November 2007		0.950		0.973		0.994		0.987		0.970
December 2007		0.930		0.951		0.969		0.975		0.978
Weight		.30		.25		.20		.15		.10

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).

3) Multiply each seasonally adjusted diffusion index by its weight, and then add all five together.

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

2007 Seasonal Adjustment Factors for ISM Non-Manufacturing Indexes
		Business Activity			New Orders			Employment			Prices
January 2007		0.890			0.947			0.958			0.979
February 2007		0.986			0.994			0.967			1.004
March 2007		1.068			1.023			1.013			1.058
April 2007		1.090			1.073			1.030			1.087
May 2007		1.038			1.046			1.039			1.031
June 2007		1.063			1.055			1.046			1.008
July 2007		1.003			1.014			1.044			1.028
August 2007		0.968			0.973			0.981			0.973
September 2007		0.967			0.965			0.967			0.968
October 2007		0.976			0.969			0.965			1.000
November 2007		1.007			1.007			1.003			0.935
December 2007		0.946			0.935			0.988			0.928

Revised Manufacturing Seasonally Adjusted Indexes 2003-2006
				New						Supplier
		PMI		Orders		Production		Employment		Deliveries		Inventories
Jan 2003		52.8		58.2		54.1		47.4		52.8		44.2
Feb 2003		49.7		51.9		53.6		42.6		52.8		43.0
Mar 2003		46.5		47.2		47.0		42.2		52.6		42.3
Apr 2003		46.4		47.2		48.5		41.8		49.9		43.1
May 2003		49.9		53.4		52.9		42.4		50.6		45.7
Jun 2003		50.4		53.6		54.1		45.6		49.8		42.0
Jul 2003		52.1		56.8		53.9		46.3		51.5		46.3
Aug 2003		55.5		61.1		61.8		47.1		53.0		43.1
Sep 2003		54.3		60.8		57.8		46.5		53.4		43.4
Oct 2003		57.5		64.4		62.8		48.6		54.6		45.6
Nov 2003		60.9		69.1		66.6		50.4		56.4		49.7
Dec 2003		63.2		71.3		70.0		54.1		59.3		45.9
Jan 2004		63.1		70.0		68.9		54.3		61.6		47.8
Feb 2004		61.8		66.4		65.7		55.8		62.8		48.7
Mar 2004		62.4		65.9		65.8		56.9		66.7		48.2
Apr 2004		62.9		67.4		66.6		57.4		66.8		45.0
May 2004		62.9		64.5		65.5		60.3		68.1		48.7
Jun 2004		61.4		61.3		63.9		59.5		66.9		51.1
Jul 2004		61.2		63.0		64.2		57.4		64.5		50.9
Aug 2004		59.5		61.9		59.9		56.5		62.7		52.1
Sep 2004		57.9		57.7		59.5		58.0		59.8		51.6
Oct 2004		57.1		58.1		59.2		55.4		59.1		49.4
Nov 2004		57.2		59.8		57.6		56.7		56.8		50.2
Dec 2004		58.5		65.6		57.8		53.6		55.6		53.0
Jan 2005		56.7		57.1		58.1		58.4		54.1		52.7
Feb 2005		55.1		55.2		57.7		55.9		54.1		48.3
Mar 2005		55.3		57.5		56.6		53.1		53.0		53.6
Apr 2005		53.5		54.9		56.6		51.8		51.7		47.8
May 2005		51.9		52.8		55.6		48.7		50.7		48.1
Jun 2005		54.1		56.7		56.4		50.9		53.1		48.2
Jul 2005		56.1		59.5		59.6		53.6		52.4		47.6
Aug 2005		53.4		56.3		55.1		53.0		50.5		45.7
Sep 2005		57.9		61.0		60.6		53.4		58.7		49.7
Oct 2005		58.5		60.1		61.7		54.9		61.2		48.4
Nov 2005		57.7		59.4		61.2		55.8		57.1		48.9
Dec 2005		55.5		58.6		58.3		53.3		52.9		47.3
Jan 2006		55.3		57.9		57.6		52.6		55.3		46.8
Feb 2006		56.1		60.5		57.9		53.7		52.2		49.3
Mar 2006		55.3		58.4		57.2		52.7		53.7		48.5
Apr 2006		56.9		57.6		59.8		55.1		57.2		50.7
May 2006		54.7		54.8		57.3		52.7		57.1		48.4
Jun 2006		54.0		57.4		55.2		49.4		55.1		47.8
Jul 2006		54.4		55.6		56.8		51.1		55.4		50.1
Aug 2006		54.3		54.6		55.5		53.9		54.9		49.8
Sep 2006		52.7		54.2		54.9		49.6		54.1		47.1
Oct 2006		51.5		52.1		52.7		50.6		50.6		49.3
Nov 2006		49.9		49.7		49.3		48.9		52.8		49.1
Dec 2006		51.4		51.9		52.4		49.4		53.3		48.5

Revised Non-Manufacturing Seasonally Adjusted Indexes 2003-2006
		Business Activity			New Orders			Employment			Prices
Jan 2003		56.2			54.4			50.5			58.0
Feb 2003		55.6			53.9			48.5			60.5
Mar 2003		46.3			49.9			48.1			59.4
Apr 2003		50.7			50.4			48.7			55.7
May 2003		54.6			55.9			48.5			50.0
Jun 2003		59.2			57.1			49.3			52.3
Jul 2003		62.7			62.3			50.5			51.4
Aug 2003		65.1			66.9			51.7			56.1
Sep 2003		63.8			61.4			50.1			59.5
Oct 2003		64.4			64.2			53.0			57.2
Nov 2003		61.1			61.3			54.4			58.5
Dec 2003		60.0			61.2			54.0			61.1
Jan 2004		67.9			64.7			54.1			61.8
Feb 2004		62.2			60.9			53.1			59.5
Mar 2004		61.8			62.3			53.6			65.1
Apr 2004		63.9			62.5			54.5			68.1
May 2004		63.3			60.8			55.2			73.6
Jun 2004		59.8			62.1			56.5			73.9
Jul 2004		63.6			63.6			49.6			70.4
Aug 2004		59.3			59.5			53.2			70.0
Sep 2004		59.8			60.8			55.3			67.7
Oct 2004		60.8			61.7			56.2			71.4
Nov 2004		62.6			60.4			54.9			71.7
Dec 2004		65.2			62.4			54.9			72.2
Jan 2005		62.6			61.4			52.6			67.7
Feb 2005		61.1			62.2			59.2			69.0
Mar 2005		60.9			61.6			56.6			66.4
Apr 2005		58.4			57.9			53.5			63.5
May 2005		58.3			58.7			53.1			59.1
Jun 2005		61.0			59.1			56.9			60.5
Jul 2005		61.1			61.9			55.4			67.4
Aug 2005		64.8			65.6			59.9			66.9
Sep 2005		55.2			57.4			55.8			80.5
Oct 2005		59.4			57.9			53.8			74.9
Nov 2005		58.8			59.3			56.9			72.6
Dec 2005		60.6			63.3			56.9			67.9
Jan 2006		59.1			56.9			51.6			67.8
Feb 2006		60.5			56.8			57.5			67.0
Mar 2006		59.6			59.3			54.2			61.1
Apr 2006		61.1			61.6			56.9			69.8
May 2006		59.2			59.0			56.9			73.2
Jun 2006		56.9			56.9			52.6			72.3
Jul 2006		55.7			56.0			54.1			72.1
Aug 2006		56.9			53.3			51.9			71.9
Sep 2006		54.6			57.5			53.3			58.2
Oct 2006		57.4			55.8			51.8			52.6
Nov 2006		58.3			56.2			51.9			57.2
Dec 2006		56.7			55.6			53.2			59.7

For a downloadable spreadsheet illustrating side-by-side comparisons of previous and adjusted indexes, visit the ISM web site at:

www.ism.ws/files/ISMReport/SeasonalAdjustCompare2007.xls

The Manufacturing 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 43,000 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).