More bullish data from manufacturing

The latest ISM numbers are in for the U.S., showing that the manufacturing sector expanded for a fourth consecutive month in November. The overall number was weaker in November at 53.6 than last month’s 55.7. But both new orders and production point to more of the same in the next month or two going forward.

On the other hand, while employment in the sector is growing, the number is down and very close to showing a contraction – great for productivity and profits but terrible for the jobs picture.

Overall, respondents to the survey confirm the better environment but are concerned about prices.

WHAT RESPONDENTS ARE SAYING …

• "Becoming concerned about the value of the U.S. dollar." (Apparel, Leather & Allied Products)
• "Low value of the dollar driving commodity costs higher." (Food, Beverage & Tobacco Products)
• "Demand from automotive manufacturers remains strong and building." (Fabricated Metal Products)
• "Capital construction seems to be picking up, and we are seeing more jobs that are bid out." (Electrical Equipment, Appliances & Components)
• "Steady increase in business." (Primary Metals)

Inventories continue to contract. and look likely to continue to subtract from GDP. generally speaking, this is a good thing if you want a sustainable recovery because pro-cyclical inventory building is part and parcel of recovery. For now, however, inventories continue down. Whether this demonstrates weak demand is unclear. But, the fact that the cyclical chemical sector was one of the only two customer inventory segments to show an uptick suggests a benign interpretation.