Tuesday, September 1, 2009

ISM Mfg Index Released on 9/1/2009 10:00:00 AM For August, 2009

The ISM's manufacturing index burst over the dead-even 50 level for the first time since the beginning of the recession, at 52.9 in August vs. 48.9 in July. New orders led the advance, at 64.9 vs. August's 55.3 and pointing to rising business activity in the months ahead. Production was also very strong in August, at 61.9 for a 4 point gain and pointing to gains in durable goods shipments and total manufacturing sales. Backlogs also increased, at 52.5 vs. 50.0 in July. But manufacturers are not stocking up, instead they continue to draw down inventories where the index is a very weak 34.4 vs. 33.5 in July. Note that future gains in the inventories index, a seeming necessity given rising production needs, will help give the overall index a big boost. Respondents in fact think inventories at their customers' firms are too low, with the customer inventories down 3.5 points to 39.0. Deliveries slowed substantially, up more than 5 points to indicate that current production needs are stressing what has become a pared down supply chain. Production activity and the gain in orders has yet to boost employment where the index only inched forward to a still sub-50 level of 46.4.

All the strength here is flowing through to prices where the prices paid index jumped 10 points to 65.0, an indication that buyers are bidding up prices for raw materials. No doubt boosted by cash-for-clunkers and gains in transportation, the manufacturing recovery is on the way and together with the gain in the pending home sales index indicate that two key sectors are on the acceleration. Stocks jumped in immediate reaction to today's 10 o'clock data.
Construction Spending
Released on 9/1/2009 10:00:00 AM For July, 2009
Prior Consensus Consensus Range Actual
Construction Spending - M/M change 0.3 % 0.0 % -0.5 % to 0.3 % -0.2 %
Construction outlays fell in July but showed significant divergence among components as residential outlays rebounded while public and nonresidential construction declined. Overall construction spending edged down 0.2 percent in July after making a partial comeback of 0.1 percent in June. The dip in July came in below the consensus projection for no change. The decline in spending in July was led by a 1.2 percent decrease in private nonresidential outlays while public spending also fell-by 0.7 percent. The good news in the report was that private residential outlays added to the view that the housing sector is recovering with a 2.3 percent boost in July after declining 0.4 percent in June.

The July construction spending report was not as good as expected but equities liked the better-than-expected ISM manufacturing index and pending home sales index which were released at the same time as construction outlays. Overall, housing appears to have turned the corner and likely is in slow recovery. Meanwhile, the public and nonresidential sectors continue their downtrends.

Pending Home Sales Index
Released on 9/1/2009 10:00:00 AM For July, 2009
Prior Actual
Pending Home Sales Index - Level 94.6 12.0 %
Pending Home Sales Index - M/M 3.6 % 3.2 %
Pending home sales continue to improve pointing to extending gains for existing home sales. The pending home sales index rose 3.2 percent extending a long streak of gains and compared with a 3.6 percent rise in June. The year-on-year is very strong at 12.0 percent. Nearly all indications on the residential side, including today's construction spending report, point to accelerating gains in what is very good news for the economic recovery.

No comments:

Post a Comment