ISM Manufacturing Points to Upside Surprise

Posted on Monday, November 2, 2009

Credit Writedowns with the bullish details:

If you have been wondering whether a statistical recovery is at hand, today's ISM manufacturing report should be the clincher. The report was definitely bullish with the ISM index rising to 55.7 and sub-components supporting the understanding that the manufacturing sector is expanding. This is quite a contrast to last month's weak data and demonstrates that last month was a one-month aberration in what should now be seen as a full-blown technical recovery.

One can easily see the huge jump in production, but importantly there was still a decline in inventories. The importance? Back to Credit Writedowns:

But, from my perspective, it is inventories which are the most bullish data points. The inventories data show that inventories in the manufacturing sector were still being purged in October even while production is increasing. That means that inventories are likely to make a huge contribution to GDP going forward in Q1 and Q2 of 2010. GDP could again surprise to the upside.

But that's not all... look at employment. In positive 'expansionary' territory. Lets go to Calculated Risk for the importance of that figure:

According to the BLS, manufacturing employment has declined by about 50 thousand per month for the last 3 months. The ISM survey suggests that manufacturing employment might have increased in October. The equation suggests an increase of about 4,000 manufacturing jobs in October (with significant variation) - not much, but that is far better than losing 50,000 jobs per month.

Got to say... good relative news all around.

Source: ISM

Jake 02 Nov, 2009

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Source: http://econompicdata.blogspot.com/2009/11/ism-manufactruring-points-to-upside.html
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