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Highest Manufacturing ISM Since April 2011, Employment Surge To April 2012 Levels Puts Taper Back In Play
If last week's Durable Goods miss was great news for stocks, today's latest surge in the manufacturing ISM contrary to recent diffusion indices suggestion a whipser print of about 53, may be just what the Chairwoman did not order. With a December print of 57.3, up from last month's 56.4, and well above expectations of a modest decline to 55.1, this was the highest headline Manufacturing ISM print since April of 2011, just when QE2 was about to end and the economy was said to enter the virtuous cycle.
Looking at the internals, the New Orders print of 63.6, up from 60.6 is what led the headline higher. This was the highest print since April 2011.
What was worse for Taper watchers is that the Employment index jumped from 53.2 to 56.5, the highest since April 2012, and indicative that the November NFP number on Friday, perhaps the most critical data point ahead of the December FOMC announcement, may surprise well to the upside. In that case, the Fed may have no choice but to finally do what it threatened it would do in September and adjust the monthly flow lower by $10-$15 billion especially since as we will show momentarily, the Fed now owns one third of all marketable 10 year equivalents!
From the report:
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 57.3 percent, an increase of 0.9 percentage point from October's reading of 56.4 percent. The PMI™ has increased progressively each month since June, with November's reading reflecting the highest PMI™ in 2013. The New Orders Index increased in November by 3 percentage points to 63.6 percent, and the Production Index increased by 2 percentage points to 62.8 percent. The Employment Index registered 56.5 percent, an increase of 3.3 percentage points compared to October's reading of 53.2 percent. This reflects the highest reading since April 2012 when the Employment Index registered 56.8 percent. With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing."
Of the 18 manufacturing industries, 15 are reporting growth in November in the following order: Plastics & Rubber Products; Textile Mills; Furniture & Related Products; Primary Metals; Food, Beverage & Tobacco Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Chemical Products; Computer & Electronic Products; Nonmetallic Mineral Products; and Fabricated Metal Products. The three industries reporting contraction in November are: Apparel, Leather & Allied Products; Wood Products; and Machinery.
The respondents this time, unlike last time when the print once again surged despite pervasive government shutdown pessmism, are almost uniformly optimistic:
- "Seasonal demand has not decreased at the typical pace." (Primary Metals)
- "Incoming order rate remaining strong." (Fabricated Metal Products)
- "Outlook for the remainder of the year and into 2014 is trending positive." (Chemical Products)
- "Overall business climate is good. Business is steady." (Transportation Equipment)
- "Sequestration and cutbacks in defense spending continue to impact business." (Computer & Electronic Products)
- "Market continues to be stronger than normal for this time of year." (Wood Products)
- "Getting much busier toward the end of the year." (Furniture & Related Products)
- "Seeing consistent uptick in demand." (Food, Beverage & Tobacco Products)
- "Federal debt, deficit and inefficiency are causing a level of caution and uncertainty." (Machinery)
- "Ordering for 2014 seems to be increasing in comparison to the past six months." (Miscellaneous Manufacturing)
Finally, breaking down the commodities up and down in price:
Commodities Up in Price
- Steel Coil; Steel — Cold Rolled; Steel — Hot Rolled; and Wood.
Commodities Down in Price
- Aluminum; Caustic Soda (2); Corn Based Products; Fuel; Polypropylene Resin; and Sulfuric Acid.
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FORK-A-SURVEY! Hard data please.
2009 Exit Strategy is back in play? Did it ever leave the Fed's press releases as a way of controling the markets? You know.... those "mulitple policy tools" the Fed has ready at their disposal to get the economy going. Humpty dumpty economics by four score Feds and four score more, will never make the economy what is was before.
LMFAO. Fed is ineffectual. Fed is lost. Bring taper baby.... let's do this!!! Would love to see the markets after a full-on taper.
Such bullshit.
Buy the TLT dip.
"Employment Surge To April 2012 Levels Puts Taper Back In Play"
No it doesn't. Remember, there ARE NO BUBBLES. Therefore, no need to reduce the monetary meth injections.
Baffle 'em with bullshit
Markets are at all time highs. If cost of borrowing goes up, market tanks and nobody will believe anything they say or release. So you get a "better than expected" report once in a while just to keep the confusion going. Overall the economy is treading water although Boeing sold a bunch of planes at the last Dubai airshow and their numbers are big enough to make a dent.
Such as residential construction.
See auto sales channel stuffing-consider the supply chain as they build inventories-probably not sustainable-light sout in January if real sales do not materialize as dealers running out of room to store cars even at 2% financing.
This is such a farce!
Obama needed some good news to distract the clueless from the latest healthcare.gov ineptitude. The bureaucrats delivered, as requested. Gotta accentuate the positive, eliminate the negative.
If you think Janet is going to allow this, you better think again.
The treasury shorts are piling in again. All I see is them getting slaughtered again. With that said starting off the year short may be the way to go.
Channel stuffing...
Everything is bullish, but I am curious as to what the earth is manufacturing and to what aliens we are selling these things. More importantly, what are they giving us of real value in exchange for our labor and resources?
Manufactured numbers. And plenty of (false) hope and (pocket) change.
ah the TV sales did it. Whoo Hoo more IPADS, TV's and IPHONES.
Fire up the Pittsburgh steel mills. Q99x2 is coming home.
If (possible) tapering of QE3 is so bad for PMs why was QE3 itself not good for PMs?
Because it is when it ain't and it ain't when it is.
I thought there was a reasonable explanation, thanks.
Because there were a lot of trader's juicy stops at $1234. Why should they profit from any move?
'It puts the taper back in play'.....LMAO good one!! Like a heroin addict saying the quality of heroin is getting so much better so now he can cut back...yeaaaaa right.
Sequestration ? Seriously? You're still trying to blame that? How about telling the truth? Your company is a welfare bitch, and you can't survive without the government tit.
and exactly what in the fuck is being manufatured in the dead economic collection of slave states that is resposible for this print?????????????????????????????????????????????????
Tobacco and cotton.
and alcohol. good ole booze..tobacco and alcohol consumption increases in lean economic times - cheap entertainment I reckon.
I wondered the same thing a while back? By Slapping Labels " made in the USA" and selling to the Govt is considered Mfg, then it counts per the ISM to be counted in as such. Ah the great farce
Financial weapons on mass destruction and bullshit. Which, by the way, are mutually interchangeable.
http://www.cnbc.com/id/101230647?__source=yahoo%7Cfinance%7Cheadline%7Ch...
Greatest Minds
who is not buying the sulphuric acid....come on..... everyone needs some acid....
like any of the data really matters.
"In that case, the Fed may have no choice but to finally do what it threatened it would do in September and adjust the monthly flow lower by $10-$15 billion especially since as we will show momentarily, the Fed now owns one third of all marketable 10 year equivalents!"
The FED never threatened to taper in September, that is what pundits were predicting. The FED siad it would look at the data.
If the FED only owns 1/3, they still have 2/3 left to go.
Not only did PMIs beat in the US but worldwide as well. I can't buy the arguement that this data is not indicative of a growing economy. So p/e on SPX is actually right in line with this type of growth.
"Sequestration and cutbacks in defense spending continue to impact business." (Computer & Electronic Products)"
Demand pulled forward, is future demand suppressed. The future is now.
WTF does USSA manufacture anymore- Drones, Spying and Slurpee?
Let me be perfectly clear...No it doesn't!
manufactoring data of what ? fucking christmas tree ornaments? getta fuck outa town!
Manufacturing data now includes the cottage industry of manufacturing mfg data.
Before, "good news data" was for political purposes, i.e., the economy is improving, therefore re-elect me. But now, it seems like government now has to "manufacture" good data to blunt the impact of the fact that they no longer have as much time/room left to print and need an excuse to taper sooner rather than later.