 | The ISM Manufacturing Index Increased to 57.3 in November |
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| Posted Under: Data Watch • ISM |
Implications: The ISM index, a measure of manufacturing sentiment around the country boomed in November coming in at the highest level since April 2011, easily beating consensus expectations, and rising for the sixth consecutive month. According to the Institute for Supply Management, an overall index level of 57.3 is consistent with real GDP growth of 4.7% annually. We don't expect real GDP to grow anywhere near that pace in Q4, but we do expect much faster growth in 2014. The new orders index boomed to 63.6 in November, coming in at the highest level since early 2011. The employment index moved higher to 56.5 from 53.2, the highest level since April 2012. This is consistent with the plow horse growth we have been getting out of the labor market over the past few years and signals another positive report on payrolls this Friday. On the inflation front, the prices paid index declined to 52.5 in November from 55.5 in October. Still, little sign of inflation, but we don't expect this to last given loose monetary policy. In other news this morning, construction increased 0.8% in October, led by government projects, such as schools. Nonetheless, revisions to prior months and delayed data due to the partial government shutdown show some weakness, especially in home building, during September and August. We expect that weakness to be temporary. New home construction is up 20.8% from last year while home improvements are up 13.2%. Population growth and scrappage should generate enough demand for new housing that similar gains unfold in the year ahead. The Plow Horse Economy continues to move forward.
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