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Friday, January 20, 2012 - 15:58

Update:Ex-ISM Surv Head:'SLIM'Corrlatn W/ISM Yet to Be Proven

--Updating Story Sent 13:59 ET With New Comments From Ore
--Research Firm Strategas Has No Plan To Issue Non-Mfg SLIM Equivalent

WASHINGTON (MNI) - The former head of the widely followed Institute For Supply Management manufacturing index Friday said it "remains to be proven" how his new employer's leading manufacturing index correlates with the ISM index.

Research firm Strategas announced Friday the creation of the Strategas' Leading Indicator of Manufacturing (SLIM), an early monthly measure of manufacturing activity.

The survey will be conducted by former ISM survey chief Norbert Ore, whose hiring by Strategas was also announced Friday.

Asked how SLIM and ISM correlate, Ore told Market News International "That remains to be proven when we have sufficient history available."

He added, "New Orders and Supplier Deliveries are leading indicators and hopefully will show a correlation with ISM, but that is not necessarily our intent."

"The intent is to provide an early insight of manufacturing performance," he said. :New Orders and Supplier Deliveries make up 40% of the ISM Manufacturing Index and have a high correlation with the PMI," he pointed out. "As leading indicators, they should be the first to indicate a change of direction."

In a press release earlier Friday, Strategas Managing Partner and Chief Investment Strategist Jason Trennert said "Norbert's vast experience in conducting such high frequency economic studies will provide our clients with an advanced look at the market-moving ISM at the start of the following month."

Ore told MNI there is no plan "at this time" to expand the SLIM index to include additional components such as prices.

Strategas said Friday SLIM's New Orders component was 62.5 in January, indicating an acceleration in the pace of manufacturing activity relative to December.

"The Supplier Deliveries Index with a reading of 50 percent was less optimistic by comparison and signals no change in demand," Ore said in the press release.

The survey was conducted late in the January 9 week.

Ore told MNI the SLIM new orders component was 68 in December and the supplier deliveries 58.

The ISM new orders index was 57.6 in December, up from 56.7 in November, and supplier delivery was unchanged at 49.9.

Current ISM survey chief Bradley Holcomb said on January 3 that he sees "the PMI continuing to climb up, gradually, slowly over the next few months," but did not specify by component.

ISM will publish its January survey results on February 1st at 10:00 am ET, followed by the non-manufacturing survey on February 3rd.

Asked whether he had any plans to create a non-manufacturing version of the SLIM, Ore told MNI that "non-manufacturing is more coincident, and more difficult to gauge early in the month."

He also told MNI that Strategas intends to release the SLIM index "on or about the 14th of each month depending on how the weekends and holidays fall."

Regional measures of manufacturing activity are released during the month, but the national report on business only comes the first working day of the following month.

The ISM Purchasing Managers' Index is based on the seasonally adjusted diffusion indexes for five indicators, with a 20% weight for each of them: New Orders, Production, Employment, Supplier Deliveries, and Inventories.

The report, however, also includes unadjusted components: Customers' Inventories, Prices, Order bakclog, New Export Orders and import orders.

** Market News International Washington Bureau: 202-371-2121 **


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