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  The ISM Manufacturing Index Rose to 53.1 in January from 50.2 in December
Posted Under: Data Watch • ISM

Implications: The new year starts with a solid report on manufacturing sentiment as the ISM manufacturing index surprised to the upside in January rising to 53.1, the best reading since April. According to the Institute for Supply Management, a level of 53.1 is consistent with real GDP growth of 3.4%. More likely, today's data is consistent with what will be roughly 2.5% real GDP growth in Q1. We expect manufacturing to continue to improve over the coming months as the negative effects of policy uncertainty and Sandy continue to subside. The best news in today's ISM report was that the employment index rose, coming in at 54.0, the highest level since June. Also, the new orders index showed expansion again and moved to the highest level since May. Despite the softness shown in some regional manufacturing surveys, the overall manufacturing sector looks to be doing just fine. On the inflation front, the prices paid index rose to 56.5 in January from 55.5 in December. We expect prices, and inflation, to continue to gradually move higher. In other news this morning, construction increased 0.9% in December (+2.2% including revisions for prior months). The gain in December was due to home building (particularly home improvements) as well as commercial construction (led by power plants, manufacturing facilities, and higher education buildings). Home building is up 24% from a year ago while commercial construction is up 8%. Look for continued gains in these categories in the year ahead.

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These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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