Signs of weakness in the global economy were not apparent in this morning’s ISM report. Equities were set to tumble 1% this morning after weaker than expected data in China and continued concerns in Europe, but turned around on the ISM’s release. Econoday detailed the strength of the report:
“Robust month-to-month growth for new orders and employment highlight another very strong ISM manufacturing report. New orders held steady at 65.7, a reading well over breakeven 50 and the third in a row over 60. Employment index was last above 60 back in May in 2004. May’s reading came in at 59.8 for a 1.3 point gain to indicate significant acceleration in hiring.
Other readings include strength for production, backlogs, export orders and continued delays for deliveries. Input prices continue to show significant pressure. The activity in production appears to be drawing inventories which points to a rising necessity for inventory restocking and a future boost for production and employment.
This report is very positive and should help bolster the optimists who say the U.S. economy is on the mend.”
Robert Ore, chairman of the ISM Manufacturing Business Survey Committee is quite confident in the strength of the recovery:
“The manufacturing sector grew for the 10th consecutive month during May. The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months. The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn.”