ISM Manufacturing Goes into Expansion Mode; AP Changes Subject

Earlier this week, to avoid "undue" emphasis on how much the situation has been improving in Iraq, the press, in search of bad news, switched its focus to Afghanistan (examples here, here, and here). Kyle Drennen and Warner Todd Huston at NewsBusters noted this on Tuesday.

Similarly, Associated Press writer Ellen Simon, confronted with a key report showing economic improvement, decided that it was more important to discuss inflation.

On Tuesday, the Institute for Supply Management's Manufacturing Index, after four months of contraction, returned to slight expansion mode with a reading of 50.2 (any reading above 50 indicates expansion). The result confounded the "experts," who predicted that the index would fall by about a point instead of rising by 0.6 points.

I don't think I've ever seen AP fail to give the overall ISM result first- or second-sentence treatment, but Simon managed that trick by covering the report's inflation component, moving the overall ISM index reading down to the fourth paragraph:

Manufacturers struggle to overcome rising prices

NEW YORK (AP) — Each week, Ira Cooper opens a letter from another supplier with the same message as the last: We're raising our prices, effective immediately. We can't tell you how long the new prices will last.

"We used to get quotes good for six months," said Cooper, president of QED Inc., a lighting company based in Lexington, Ky. "Now you're lucky if you can get a quote good for 15 days."

Manufacturers of everything from wallpaper to cereal are feeling the same hit. The Institute for Supply Management said Tuesday that its index of prices manufacturers pay for raw materials hit 91.5 in June, up from 87 in May and the highest reading since 1979.

Its overall index of manufacturing activity was 50.2, barely breaking a four month contraction streak. Any reading above 50 signals growth.

Manufacturers are "experiencing higher prices for their inputs while demand for their products is slowing," Norbert J. Ore, chairman of ISM's manufacturing business survey committee, said in a statement accompanying the report.

I'm not denying the importance of the inflation reading's high level, or that it shouldn't have been noted. ISM's members have been expressing similar concerns about inflation for many months. I'm questioning why the inflation reading, which is one of 10 different elements of the index, preceded the much more important overall result, as I have never seen that happen. I also question why the overall reading or its movement didn't get into the story's headline.

It's not unfair to suggest that it may be that Simon had her negative inflation narrative all ready to go ahead of the report's release. It would would have worked nicely following yet another negative overall index number. But when the report came out and surprised her, she wasn't about to change what she had already written. So she moved it to the top, and moved the overall index result further down, minimizing its significance.

Simon's maneuver was just another example of AP's seemingly non-stop effort to emphasize economic problems at the expense of balance.

Cross-posted at BizzyBlog.com.

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.