Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The ISM Manufacturing Index Ticked Down to 55.3 in June
Posted Under: Data Watch • ISM
Supporting Image for Blog Post

Implications: After four straight months of strong moves higher, the ISM Manufacturing index, a measure of factory sentiment around the country, dipped slightly to 55.3 in June. Despite the 0.1 point decline, today's reading represents the second highest level so far this year. While not quite back to the levels of late last year, the index has stood in expansion territory for thirteen consecutive months and we expect the index to show continued strength as companies ramp up production. The best news in today's report came in the new orders index, which rose to 58.9, the highest reading since the end of last year, and a sign that activity should continue to pick up in the months ahead. According to the Institute for Supply Management, an overall index level of 55.3 is consistent with real GDP growth of 4% annually. We don't expect a growth rate quite that fast for Q2, at least not yet, but do expect a sharp rebound to about a 3% growth rate. On the inflation front, the prices paid index fell to a still-elevated 58.0 in June from 60.0 in May. Along with broader measures of consumer and producer prices, inflation is starting to show signs of the loose monetary policy of the past several years. The employment index remained unchanged in June, but plugging today's data into our models, including the Intuit Small Business report, our forecast for Thursday's employment report are solid gains of 208,000 and 203,000 for nonfarm and private payrolls, respectively. In other news this morning, construction increased 0.1% in May. However, the gain in April was revised to a 0.8% increase from a previous report of 0.2%. This supports our forecast for better economic growth in Q2. For May itself, gains in commercial construction and government projects – particularly power plants, sewage, and water supply – offset a drop in single-family home building and home improvements. Don't worry about home building, though. It's volatile month-to-month but we expect further substantial gains in the year ahead.

Click here for PDF version
Posted on Tuesday, July 1, 2014 @ 11:05 AM • Post Link Print this post Printer Friendly

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.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.