U.S. ISM Manufacturing
The U.S. Institute for Supply Management (ISM) Index was reported at 54.1, up from 53.1 last month (Figure 1.1).
• This is the best reading since 55.8 on July 1, 2011.
• New Orders rose to 57.6 from 54.8, the highest reading since last April’s 62.7 (Figure 1.2).
• I view the New Orders component of the report as the most important indicator.
- Other components:
- Production Index fell to 55.7 from 58.9
- Export Orders rose to 55 from 53
- Employment Gauge fell to 54.3 from 54.8
- Prices paid increased to 55.5 from 47.5
- Orders waiting to be filled rose to 52.5 from 48
- Inventory Index rose to 49.5 from 45.5
- Customer stockpiles rose to 47.5 from 42.5
COMMENTARY: I am very impressed with the strength in New Orders. Historically, this has been a leading indicator to a rebound in domestic growth. Manufacturing is reaccelerating, as this report is consistent with regional improving reports from Philadelphia, New York, Dallas, Richmond, and Kansas City. In fact, I would expect economists to gently uptick their GDP forecasts for Q1 above 2.0%.
Figure 1.1 U.S. ISM Manufacturing Index
Figure 1.2 U.S. ISM New Orders