U.S. Institute of Supply Management Admits to Data Measurement Boo Boo
June 2, 2014
As I do early each month at 14:00 GMT after the ISM reports its survey manufacturing purchasing managers, Currency Thoughts posted a table comparing that index to the euro area manufacturing PMI, which is derived by Markit Economics. Subsequently this morning and not once but twice, the ISM revised its figure because of initial errors in its seasonal adjustment factors. The first revision bumped the index upward by 2.8 points to 56.0, and the second scaled such back to 55.4. Even after the second change, the direction of the April to May movement of the index went from downward, implying a slower rate of expansion, to upward, which implies faster growth in manufacturing. Likewise, as originally reported, the U.S. advantage versus Euroland narrowed, but the revised data show the U.S. advantage instead widening. Investors count on data being released at scheduled times and revisions also being made known at previously scheduled times. The assumption is that a data point represents the best estimate then available, but of course data measurement, like forecasting itself, is not perfect as today proved. The table below keeps a row of the table I posted earlier but then adds a second row for May showing the results after the ISM’s mistake had been announcement and revised a second time. Among sub-components of the U.S. report, new business now shows an index of 56.9, representing a 1.8-point higher value than the April level; the earlier erroneous report for May had indicated that the new orders index fell by 1.8 points. Production has been revised to a reading of 61.0 versus 55.7 in April and 55.2 reported earlier today for May.
| Mfg PMIs | U.S. | Euroland | Spread | EUR/USD |
| Jan 2012 | 54.1 | 48.8 | +5.3 | 1.290 |
| February | 51.9 | 49.0 | +2.9 | 1.323 |
| March | 53.3 | 47.7 | +5.6 | 1.320 |
| April | 54.1 | 45.9 | +8.2 | 1.315 |
| May | 52.5 | 45.1 | +7.4 | 1.280 |
| June | 50.2 | 45.1 | +5.1 | 1.254 |
| July | 50.5 | 44.0 | +6.5 | 1.230 |
| August | 50.7 | 45.1 | +5.6 | 1.255 |
| September | 51.6 | 46.1 | +5.5 | 1.286 |
| October | 51.7 | 45.4 | +6.3 | 1.297 |
| November | 49.9 | 46.2 | +3.7 | 1.283 |
| December | 50.2 | 46.1 | +4.1 | 1.313 |
| Jan 2013 | 53.1 | 47.9 | +5.2 | 1.330 |
| February | 53.1 | 47.9 | +5.2 | 1.334 |
| March | 51.5 | 46.8 | +4.7 | 1.295 |
| April | 50.0 | 46.7 | +3.3 | 1.301 |
| May | 50.0 | 48.3 | +1.7 | 1.299 |
| June | 52.5 | 48.8 | +3.7 | 1.319 |
| July | 54.9 | 50.3 | +4.6 | 1.309 |
| August | 56.3 | 51.4 | +4.9 | 1.331 |
| September | 56.0 | 51.1 | +4.9 | 1.335 |
| October | 56.6 | 51.3 | +5.3 | 1.364 |
| November | 57.0 | 51.6 | +5.4 | 1.349 |
| December | 56.5 | 52.7 | +3.8 | 1.370 |
| Jan 2014 | 51.3 | 54.0 | -2.7 | 1.361 |
| February | 53.2 | 53.2 | 0.0 | 1.366 |
| March | 53.7 | 53.0 | +0.7 | 1.380 |
| April | 54.9 | 53.4 | +1.5 | 1.380 |
| May | 53.2 | 52.2 | +1.0 | 1.374 |
| May Revised | 55.4 | 52.2 | +3.2 | 1.374 |
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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