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    ISM Manufacturing ticks higher at 50.8

    Just when the world started to think the gloominess to 2016 was behind us, ISM manufacturing reminds it is too soon to open the champagne.  Whilst still expanding, the advance has softened by 1% to 50.8 vs 51.8 previously. 

     



    Showing the full history better displays why this indicator is used to assess business cycles. However as with any attempt to forecast the future from historical prices we face the same difficulties; Have we witnessed a trough and are about to embark on another epic leg higher for the US economy or; was last months' rise merely a retracement before the 'real; leg down begins?




    The employment index still points to potential weakness for Nonfarm data further down the track. it is frequently pointed out at manufacturing only accounts for about 20% of the economy but it should also be remembered that manufacturing is an earlier process to supply the materials and tools for the services sector. Also it has an 85% correlation with GDP with a history spanning back to the 1940's, so is likely to be closely watched for years to come regardless of its’ contribution to overall GDP. 

    New Orders:
    -2.5% contraction from previous read but still expanding at a respectable 55.8.
    - 15 sectors expanded their new orders whilst the only contraction was textile mills

    Production
    - 1.1% from previous but expanding at 54.
    - 15 industries expanded whilst two contracted (Petroleum/coal and textile mills)

    Employment:
    - Contracted 5th month but at a slower rate
    ​- 18 sectors expanded their hiring whilst five contracted


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