The Institute for Supply Management, the Arizona-based trade group that reports on both manufacturing and non-manufacturing activity each month, issued metrics for the former within the past hour (the latter category will be reported on this Wednesday) and the results were notably better than expected.
To wit, after the ISM had issued data showing a further slight improvement in this area in October, when this series had come in at 56.4--easily bettering the 50.0 reading that denotes the mid-point between a contracting and an expanding manufacturing area--the forecast had been for a slight slowing in such growth in November, as a 55.0 reading had been expected. Encouragingly, though, the report showed an increase in the aggregate manufacturing number to 57.3.
Interestingly, the total Purchasing Managers Index, or PMI, has risen every month since June, and is easily at the best level of the year thus far. In addition to the overall number of 57.3, November also saw a faster rate of increase in new orders, where the aggregate figure rose to an imposing 63.6 from 60.6 in October. In addition, production perked up, coming in at a strong 62.8, up from 60.8 the month before. Employment, too, gained additional traction, increasing from 53.2 to 56.5. On the other hand, we saw a lesser gain in supplier deliveries, with that sector slowing a bit from 54.7 to 53.2. Prices also eased a bit, but backlogs and exports both strengthened anew.
Taking the report as a whole, the November report is the highest reading of the year, with the range for 2013 being 49.0 (in May) to the aforementioned 57.3 last month. The average for the past 12 months is 53.4, so it is clear that we are in a sweet spot as far as the industrial sector is concerned.
Meanwhile, as far as the 18 industries are concerned, 15 reported growth in November, led by plastic and rubber products, textile mills and furniture and related products. The three industries reporting a contraction in such activity were apparel, leather & allied products; wood products; and machinery.
As for the respondents, the consensus ranged from the view that seasonal demand had not decreased at the typical pace to the incoming order rate remained strong.
Taken as a whole, this was a clearly upbeat issuance, and one that suggests that the current quarter will see an aggregate GDP growth rate that is modestly better than 2%. At the time of this article's writing, the author did not have positions in any of the companies mentioned.