It seems as though the New Year is starting out in much the same positive fashion that the old one ended--at least on the economic front. That is because following a steady stream of better-than-expected metrics issued late in the past year, we have received some upbeat data this morning.
Specifically, the Institute for Supply Management (ISM), the private Tempe, Arizona-based trade group, reported that the pace of manufacturing activity had quickened a bit in December, increasing from a reading of 52.7 in November to a survey result of 53.9 in December. That was about in line with expectations. (Readers should note that an aggregate score in excess of 50.0 suggests an expanding manufacturing sector; a result that is less than 50.0 suggests that this sector is contracting. A result below 42.0 is consistent with a recession across the country. The latest result, meanwhile, made it 31 months in a row that the industrial sector was growing.)
Not only was the overall manufacturing sector strengthening, but we also saw improvement in a number of key categories, such as new orders (up to 57.6 in December from 56.7 in November), production (59.9 versus 56.6), and employment (55.1 versus 51.8). On the other hand, supplier deliveries held steady at a nominally contracting 49.9 rate, while pricing (47.5 versus 45.0) and backlogs (48.0 versus 45.0), were a bit better, but still showed a decline in aggregate activity.
As for the various respondents, in the chemicals industry comments included that there had been some destocking and inventory reduction going on over the past month, while in machinery, the overall trends were improving, as they were on the automotive side.
All in all, this was a good report, and will be followed up some 48 hours from now by the companion report from the ISM on non-manufacturing activity, where a moderate improvement from last month's 52.0 survey result is the forecast. Overall, expectations are that the services sector reached a level of 53.0.
At the time this article was written, the author did not have positions in any of the companies mentioned.