Key Leading Indicator, The ISM Manufacturing Index, Blows Away Expectations As Employment Accelerates
ISM: [Emphasis added] "The manufacturing sector grew for the sixth consecutive month in January as the PMI rose to 58.4 percent, its highest reading since August 2004 when it registered 58.5 percent. This month’s report provides significant assurance that the manufacturing sector is in recovery. Both the New Orders and Production Indexes are above 60 percent, indicating strong current and future performance for manufacturing. This month, 13 of 18 industries reported growth, up from nine industries last month, and this is a good indication that the impact of the recovery is expanding."
This continues the recovery trend for the index, which had slipped back in November. The ISM is now higher than its recent October 2009 peak:
So far, it appears pretty hard to argue with the breakdown of ISM components. Most are growing, and faster than before. Particularly, the Employment component of the overall ISM has now continued a two-month growth trend — which is accelerating:
Furthermore, the customers inventories low print is troubling, as this presumably indicates that much of the stocking has occurred (and is stuck) at pre-processing levels. Thus, the Q4 inventory-led GDP bounce looks even shakier than before.