ISM Increases

From the Institute for Supply Management:

Manufacturing growth accelerated in April as the PMI registered 54.7 percent, an increase of 3.8 percentage points when compared to March's reading of 50.9 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

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ISM's New Orders Index surged to 58.5 percent in April.

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ISM's Production Index registered 57.3 percent in April, 4.3 percentage points higher than the 53 percent reported in March.

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In April, the ISM Prices Index registered 73 percent, indicating manufacturers are paying higher prices on average when compared to March.

In short, this is a solid report. It indicates manufacturing may be poised for a rebound. If we have 2-3 more months of similar performance in the index then manufacturing could be said to be turning around.

The only drawback is the prices paid component of the index. Inflation has been incredibly sticky this expansion. Despite the clear economic slowdown for the last three quarters inflation has been very stubbornly clinging to the 2%-3% range. This report confirms that trend is likely to continue for the foreseeable future.