Financial Professionals


ISM Kicks Off 2011


One of my favorite indicators during the past 24 months has been "The Institute for Supply Management Manufacturing Index" - released on the first business day of each calendar month. The performance of the ISM has been a leading indicator for the capital markets and its resiliency has kept me confident in their continued appreciation.

The January 3 release underscores a "handoff" in the manufacturing recovery from "inventory rebuilding" during mid-to-late 2009 to now actual spending contributions from consumers and enterprise. That handoff supports the expectation that U.S. GDP growth in 2011 may accelerate at a pace not experienced since before the 2008 credit crisis.

Let's look at the numbers:

  1. The December ISM was 57 vs. November 56.6, the highest reading since the June 1st 59.7 reading for May
  2. The "New Orders" component was 60.9, the highest reading since the June 1st 65.7 reading for May
  3. The "Inventory" component declined from 56.7 to 51.8, widening the "New Orders to Inventory" gap to a six month high

Overall ISM

Source: Bloomberg

ISM New Orders

Source: Bloomberg

ISM Inventories

Source: Bloomberg

Past performance is not a guarantee of future results.

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