Manufacturing has been a supportive force throughout the capital markets' recovery since March 2009. The U.S. ISM Manufacturing Index was a leading indicator in spring 2009 and fall 2010. The July 1 ISM Manufacturing release supports my expectation that the moderation in global growth we've seen over the past eight weeks will transition to accelerating growth in the second half of 2011.
The week of June 27 provided multiple evidence to support my belief that we are in the midst of a pause that is refreshing:
U.S. ISM Manufacturing Index, 7/31/07 - 7/1/11
- Better-than-expected Chicago PMI suggests Japan is coming back online.
- Japanese industrial production was +5.7% month on month.
- Nike's earnings suggest the consumer is still spending. North American sales surged +22%.
- IDC enterprise technology spending for 2011 is forecast at +5.6%.
- U.S. ISM Manufacturing unexpectedly rose to 55.3 from 53.5.
- These consumer discretionary corporations established a 52-week high on July 1 - Tiffany (TIF), McDonald's (MCD), Coach (COH), Starbucks (SBUX), Fossil (FOSL), Bed Bath & Beyond (BBBY), Lululemon (LULU), Chipotle (CMG), and Mattel (MAT).
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