Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  The ISM Manufacturing Index Rose to 58.7 in May
Posted Under: Data Watch • Employment


Implications: In case you missed it, the manufacturing sector is having its best year since 2004.  Including May's reading of 58.7, the ISM manufacturing index has averaged a very impressive reading of 59.0 through the first five months of the year, and a look at the details of today's report show the healthy pace of expansion should continue in the months ahead.  Similar to this morning's employment report, growth was broad based in May, with sixteen of eighteen industries reporting growth in May (no industries reported contraction).  Meanwhile the two most forward-looking indices - new orders and production – both stand at robust levels in the 60's (remember, levels above 50 signal expansion).  In fact, the new orders index has seen readings of 60 or higher for thirteen consecutive months, tying the longest stretch above 60 going all the way back the early 1970's. In other words, the strength in manufacturing isn't a blip on the radar, it's a sustained trend.  The employment index rose to 56.3 from 54.2 in April, supporting the gain of 18,000 manufacturing jobs reported in this morning's employment report.  And survey respondents suggest that employment would be higher, but for difficulties in finding both skilled and unskilled labor to fill positions. Prices, meanwhile, rose once again in May to a reading of 79.5, the highest since 2011.  A total of twenty-two commodities were reported up in price, while none showed declines.  Yet another sign (see yesterday's reported on the PCE price index) that inflation is picking up pace as economic growth accelerates, and a signal to the Fed that a total of four rate hikes in 2018 are not just appropriate, but warranted.  In addition to a rate hike that is essentially locked in for this month's Fed meeting, look for updates to both the Fed statement and economic projections to show an acknowledgement that both employment and inflation are running ahead of prior forecasts.  In sum, it's hard to find much not to like in today's report.  In other news this morning, construction spending rose 1.8% in April (and up 2.0% including upward revisions to prior months).  For April itself, a surge in home building and a pickup in spending on power projects more than offset a decline in commercial construction (think retailers and wholesalers).

Click here for PDF version

Posted on Friday, June 1, 2018 @ 12:04 PM • Post Link Share: 
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.
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 © 2021 All rights reserved.