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