Implications: Manufacturing continued to grow in September, although not quite as quickly as in August. According to the Institute for Supply Management, which publishes the ISM report, an overall index level of 54.4 is consistent with real economic growth at a 4.2% annual rate. The sub-indexes of the report also continue to show growth. The employment index remains strong at 56.5, suggesting job growth continues in the manufacturing sector. The bad news in today's report was on inflation, where the prices paid index surged to 70.5. With gold and commodity prices signaling the Federal Reserve is too easy, we expect this reading of inflation to move higher in the months ahead. In other news this morning, construction increased 0.4% in August, beating the consensus expected decline of 0.4%. Including upward revisions to prior months, construction was up 0.8% in August. The increase in August was all due to government construction, led by paving roads as well as building bridges and sewage/waste plants. New housing construction declined sharply while home improvements surged. Commercial construction declined, led by power plants and retail structures.
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Posted on Friday, October 1, 2010 @ 11:32 AM
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