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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | The ISM Manufacturing Index Increased to 56.2 in September |
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| Posted Under: Data Watch • ISM |
Implications: While Washington offers us more drama, the private sector keeps moving forward. Despite supposed fears about a government shutdown, a very strong report today for the ISM index, a measure of manufacturing sentiment around the country. The ISM came in at the highest level since April 2011, easily beating consensus expectations. According to the Institute for Supply Management, an overall index level of 56.2 is consistent with real GDP growth of 4.4% annually. We don't expect real GDP will grow anywhere near that pace in Q3, probably more like a 1.5% rate instead, but we do expect that by late this year growth will pick up noticeably from the roughly 2% trend over the past few years. Although the new orders index declined to 60.5 for September, it remains near its highest levels since early 2011. The employment index rose to 55.4 and is consistent with the plow horse improvement we have been getting out of the labor market over the past few years. This is in line with our current forecast that nonfarm payrolls increased around 200,000 in September. The Employment report is due to come out this Friday, but because of the government shutdown, it will be delayed. The same goes for the construction report that was supposed to be out this morning. On the inflation front, the prices paid index rose to 56.5 in September from 54.0 in August. Still, little sign of inflation, but we don't expect this to last given loose monetary policy.
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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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