Posts Tagged ‘Manufacturing’

ISM Disappoints, While Market Maintains its Gains

March 1st, 2010 Michael McDonough Comments off

The February’s manufacturing ISM slipped to 56.5, versus a 58.4 a month prior.  Disappointing the latest Bloomberg consensus forecast of 58.0.  Any level over 50 signifies expansion in the sector.  I continue to believe that as inventory restocking begins to slow the ISM manufacturing index will suffer as 2010 progresses.  That is without a new source of demand for manufactured goods, which does not appear to be on the short-term horizon.

Looking at the ISM’s components, prices paid fell to 67.0 from 70.0, the employment index climbed to 56.1 from 53.3, and the new orders index declined to 59.5 from 65.9. A jump in the employment index could bode well for this Friday’s employment report, which could be battered by weather related effects.

Manufacturing ISM & ISM Employment Index

Source: Bloomberg


What To Look For This Week

February 22nd, 2010 Michael McDonough Comments off

This week I am going to keep a close eye on several housing reports, which include January’s new (Wed) and existing (Fri) home sales along with December’s Case Shiller HPI (Tue)–December is the first month after what would have been the expiration of the first time home buyer tax credit.  December’s home prices likely came under continued pressure, while January’s home sales data should show at least a modest bounce after their sharp declines in December stemming from the would-be expiration of the tax credit.

I will also be watching a slew of manufacturing releases including three regional Fed surveys–together these surveys can provide some insight on the month’s ISM–and the durable goods orders report (Thu).  I anticipate that all should be positive excluding the Richmond Fed survey.

This week’s biggest news will likely culminate in a flurry of Fed speeches culminating with Chairman Bernanke’s semi-annual monetary policy report to Congress (Wed).  But, given his recent House testimony, coupled with the FOMC minutes he may not have many surprises left to deliver in this week’s testimony.  Nevertheless, markets will be keeping a very close eye on what he has to say, and any comments related to the timing of tightening will likely impact the market.  There are also several other key important Fed speeches this week that could drive some headlines.


Chinese Manufacturing Shows Marginal Gains

July 1st, 2009 Michael McDonough Comments off
In some upbeat news from China, the Chinese Federation of Logistics and Purchasing (CFLP) index and the CLSA manufacturing index both demonstrated marginal gains in June. The CFLP increased to 53.2 from 53.1 the previous month, while the CLSA index edged up to 51.8 from 51.2. This performance has been driven by China’s extensive stimulus package leading to higher lending and government spending. Possibly more interesting than the headline number was the CLSA index’s export order sub-component, which indicated a marginal expansion with a reading of 50.9 compared to 49.2 the previous month. But, it is important to keep in mind that this number was calculated from a very small base given recent historical declines. Overall, these numbers alone are unlikely to have much of an impact on the dry bulk sector. But, will reinforce the view of a gradual Chinese recovery. It is important to keep in mind that these gains are not yet sustainable without China’s massive fiscal stimulus package. Additionally, extensive loan growth could cause problems in the future for China as the level of non-performing loans is generally expected to rise.