Monday, February 1, 2010

Could This be a Manufacturing Led Recovery?

Manufacturing increased last month by 3.3 points and surprised everyone. Most surprising is that EXPORTS are actually doing well. This might mean the foreign economy is doing better than the US economy, but I choose to believe that the low dollar is finally affecting the real economy. Imports are too expensive and it is easier to sell US stuff overseas.

Recoveries are almost always led by the housing sector as folks build new houses with low interest loans, but NOT this time.  This time the housing sector is sick, sick, sick, and I've been wondering what would happen. It looks like the world is buying what America is selling.

Below is the institute of Supply Management Index. This is not real data; it is a poll of the purchasing agents who belong to the society. Pretty optimistic stuff. 




MANUFACTURING AT A GLANCE
JANUARY 2010


Index
Series
Index
January
Series
Index
December
Percentage
Point
Change


Direction
Rate
of
Change

Trend*
(Months)
PMI58.454.9+3.5GrowingFaster6
New Orders65.964.8+1.1GrowingFaster7
Production66.259.7+6.5GrowingFaster8
Employment53.350.2+3.1GrowingFaster2
Supplier Deliveries60.156.8+3.3SlowingFaster8
Inventories46.543.0+3.5ContractingSlower45
Customers' Inventories32.035.0-3.0Too LowFaster10
Prices70.061.5+8.5IncreasingFaster7
Backlog of Orders56.050.0+6.0GrowingFrom Unchanged1
Exports58.554.5+4.0GrowingFaster7
Imports56.555.0+1.5GrowingFaster5
OVERALL ECONOMYGrowingFaster9
Manufacturing SectorGrowingFaster6

Let's hope this is not too good to be true.
.