Manufacturing ISM Smashes Expectations, Surging To 2011 Levels As Construction Spending Plunges

Readers may recall that in our commentary to yesterday's Chicago PMI disappointment we had a simple prediction "What this means for the ISM is not exactly clear due to the long-running tradition of baffle with BS, but on the surface it is hardly optimistic... which likely means ISM will explode higher." Sure enough, to no surprise at all, it just did with the headline ISM manufacturing print for July exploding from 50.9, trouncing expectations of 52.0 with the biggest beat in two years, and hitting 55.4, driven mostly by a surge in production which rose from 53.4 to a ridiculous 65.0, the highest since 2004. And while virtually all of the key subindices in yesterday's Chicago PMI dipped, today it is the opposite, with New Orders (+6.4), Employment (+5.7) and Deliveries (+2.1) all posting increases. Humorously, while Chicago PMI said Prices Paid exploded, today the ISM refuted that and indicated Prices Paid dropped to lowest in a year. One just has to laugh at the Chinazation of US economic data.

The chart:

The full breakdown:

The always entertaining respondents, this month coming in almost uniformly bullish compared to the near uniform bearishness seen last month.

• "Business conditions remain stable, possibly improving somewhat in future months." (Miscellaneous Manufacturing)
• "Housing market continues to improve, leading to increased demand in product." (Electrical Equipment, Appliances & Components)
• "Overall conditions remain steady and slightly above prior year." (Paper Products)
• "Sales are holding steady. Business is good." (Furniture & Related Products)
• "Business is slow compared to previous years." (Computer & Electronic Products)
• "First half [of 2013] is better than last year — steady, slow improvement." (Printing & Related Support Activities)
• "Leading indicators continue to show stagnant-to-gradual improvement, and sales across the board continue to be flat." (Machinery)
• "Economy continues to be relatively flat. Growth in China is holding. Europe staying at a low level, and U.S. just flat." (Transportation Equipment)
• "We see gluten-free industry to be strong and it continues to grow. We also see the need for capacity in blending operations." (Food, Beverage & Tobacco Products)
• "Business remains flat. Looking for some seasonal bump as we come to the beginning of our 'busy' time." (Chemical Products)

But - of course - it wouldn't be the US economy if we didn't have aperfectly offsetting data point to provide more ammo for the bad-is-good crowd. Construction Spending collapsed the most in a year missing expectations dramatically (-0.6% vs +0.4% expectations)...

with the six-month growth rate dropping to near two-year lows...

...not exactly supportive of the 'housing recovery' base of our new normal... but as Cramer said "Facebook defines this earnings season" so we are all good.