Since the entire world now follows in the footsteps of China, its data fudging example and its Schrodinger economy which is both growing and contracting at the same time, it was very much expected that in the aftermath of the MarkIt US PMI, which missed expectations earlier, that the ISM's own Manufacturing Report on Business would smash expectations of a decline from 55.7 to 55.0, instead printing at 56.2 or the highest since April 2011.
And since the data on construction spending is not available due to the whole government shutdown thing, the mood for the day will now be set as one of exuberant enthusiasm for manufacturing, yet one where the "other" PMI will be referenced when predicting how much longer the Fed will not taper for.
Breakding down the components, there was an increase in Employment which rose to the highest reading of the year, Inventories and Prices, yet Exports, Imports and most importantly the leading New Orders all declined, with the latter printing at, 60.5, the lowest in the past 5 months.
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 56.2 percent, an increase of 0.5 percentage point from August's reading of 55.7 percent. September's PMI™ reading is the highest of the year, leading to an average PMI™ reading of 55.8 percent for the third quarter. The New Orders Index decreased in September by 2.7 percentage points to 60.5 percent, and the Production Index increased by 0.2 percentage point to 62.6 percent. The Employment Index registered 55.4 percent, an increase of 2.1 percentage points compared to August's reading of 53.3 percent, which is the highest reading for the year. Comments from the panel are generally positive and optimistic about increasing demand and improving business conditions."
Of the 18 manufacturing industries, 11 are reporting growth in September in the following order: Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Furniture & Related Products; Petroleum & Coal Products; Fabricated Metal Products; Paper Products; Printing & Related Support Activities; Transportation Equipment; Computer & Electronic Products; Machinery; and Plastics & Rubber Products. The six industries reporting contraction in September — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Textile Mills; Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Chemical Products.
Finally, the always amusing respondents:
- "Global sales generally trending moderately higher." (Textile Mills)
- "Slight increase in demand. Forecast looks better. 4Q looking better than 3Q — should begin to see demand increase in October/November." (Food, Beverage & Tobacco Products)
- "Raw materials shortages continue. General trends are up, which enhances shortage issues." (Wood Products)
- "Overall business is flat to down across the board." (Machinery)
- "Housing continues to improve, resulting in improved conditions for our industry." (Furniture & Related Products)
- "Rising costs of China labor has us re-evaluating our current position in that country." (Computer & Electronic Products)
- "Steady increase in work this month." (Primary Metals)
- "Overall business is picking up." (Transportation Equipment)
- "Outlook remains strong with housing market and customer orders." (Electrical Equipment, Appliances & Components)
- "Labor rates along the Gulf Coast are rising with the increased activity of construction and maintenance projects." (Chemical Products)