Nicholas Tenev

The ISM manufacturing index improved to 56.3 in August from 55.5 in July, above our (52.5) and consensus (52.7) expectations. A slight decrease in the new orders index to 53.1 from 53.5 was more than offset by increases in production (59.9 from 57.0) and employment (60.4 from 58.6).

The inventories index rose to 51.4 from 50.2, while the supplier deliveries index slipped to 56.6 from 58.3. Outside of the five equally weighted components of the headline, the new export orders index ticked lower, to 55.5 from 56.5, while imports rebounded to 56.5 from 52.5. The prices index increased to 61.5 from 57.5, and the order backlog index fell to 51.5 from 54.5.

This report indicates that while the manufacturing sector recovery has slowed somewhat over the past few months, the recovery is continuing at a healthy clip. The contraction seen in some regional manufacturing surveys in August seems not to have been representative of the national manufacturing sector, as the ISM production index remains above trend and the employment index was the highest since 1983.

source: BarCap