Zeev's Turnips Patch-No Politics (ZEEV)

[Sherlock356]

ISM Highlights

Nov ISM 62.8 (5.8 pts) to a 20 year high (Dec 1983).

Key Factors

Strongest level since Dec 1983 -- a stunning 20 year high as accelerating capital goods investment provides the power.
New orders of 73.7 and production of 68.3 are the strongest in our 17 year history.
Low inventories (50.0) and rising order backlogs (59.0) argue for continued strengthening in production.
Strong demand now providing a lift to employment as it rose above 50 (51.0) for the first time in 3 years.
ISM regards an employment index higher than 47.5 consistent with manufacturing payroll growth.
Prices paid (not seasonally adjusted) jumped to 64 as (output) pricing power remains extremely weak given excesses.
New export orders fell off to 57.9 as the weaker dollar and stronger global growth provide longer term support.

Big Picture

The July gain returned the index to expansion as strengthening demand left the Nov level at a 20 year high of 62.8. New orders provide the forward read on production and employment and continued to a 73.7 high in Nov. A strong and accelerated upturn in business capital investment (mfg demand), low inventories and consumer demand provide a very strong base as the sector is finally back on its feet. Even the employment index has returned to positive growth consistent with gains in monthly payrolls. Prices paid (input costs) move with energy prices as rising commodity prices provide a lift. High input costs drag profit growth as output carries no pricing power given excess capacity -- strong growth will eventually remedy that. The upward trend in actual factory orders continues and is consistent with the strong upturn in the manufacturing survey results