Virtus Vital Signs: August ISM Manufacturing
This morning, the Institute for Supply Management’s manufacturing index for August came in at 59.0, well above July’s 57.1, and the highest reading since 59.1 in March 2011 (Figure 1). Post the 2008 credit crisis, the index high is the 59.3 recorded in February 2011. The composition of today’s report was strong throughout. Of particular note, new orders rose to 66.7 from 63.4 in July – the highest level since April 2004 (Figure 2).
Today’s report should not be viewed as an indicator for investors to allocate assets to a particular equity sector or another asset class. It also should be noted that the strength of the U.S. manufacturing report is the opposite of what other global manufacturing indexes reported in the past 24 hours.
- China August PMI fell to 51.1 from July’s 51.7
- Germany August PMI fell to 51.4 from July’s 52.0
- United Kingdom August PMI fell to 52.5 from July’s 55.4
Vital Signs: U.S. Economy
- Manufacturing continues to be the strength of the U.S. economy.
- Recent consumer spending softness has been interpreted to mean an impending slowdown; the ISM evidence clearly refutes that premise.
- Q3 GDP is tracking above 3%.
- The FOMC will end its asset purchase program on October 29, 2014
Figure 1: U.S. ISM Manufacturing Index, September 2008 to Present
Figure 2: U.S. ISM Manufacturing Index: New Orders, March 2004 - Present