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U.S. ISM Back Above 50

10/01/2012

Last week we offered a blog highlighting the positive turn for the Richmond Fed Manufacturing Index. Consistent with that improvement, this morning’s monthly U.S. Institute for Supply Management Manufacturing Index rose back above 50.0 to a surprising 51.5. The composition of the index was strong throughout, however, most impressive was the positive turn in the New Orders to Inventories Index (-5.9 last month to +1.8 this month).
 
Let’s take a closer look…
 
•  U.S. ISM Manufacturing (Figure 1.1) rose to 51.5 from 49.6 last month, exceeding estimates for 49.7
   o  New Orders rose to 52.3 from 47.1 last month
   o  Inventories fell to 50.5 from 53.0 last month
   o  The very important ratio between New Orders and Inventories now stands positive again at +1.8 (Figure 1.2)
   o  Production rose to 49.5 from 47.2 last month
   o  Employment rose to 54.7 from 51.6 last month
   o  Order Backlog rose to 44.0 from 42.5 last month
   o  Prices-Paid rose to 58.0 from 54.0 last month
 
Next up this week for major U.S. economic news is Friday’s Nonfarm Payrolls report. Consensus estimates for that report follow. I would be surprised if more positive than expected numbers weren’t delivered, but thankfully I am not an economist!
 
•  Nonfarm Payrolls consensus estimates change: +110,000 to +130,000
•  Private Payrolls consensus estimates change:  +125,000 to +150,000
•  September Unemployment Rate consensus estimates change:  8.2%, up from 8.1% last month
 
Figure 1.1 U.S. ISM Manufacturing, October 2011 to October 2012

Source: Bloomberg
 
 
Figure 1.2 U.S. ISM Manufacturing New Orders to Inventories Ratio TURNS Back Positive, October 2007 to October 2012

Source: Bloomberg

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