Best reading since April 2012 and well ahead of expectations. Services are a larger part of the economy by far, but this one gets more of the attention. New orders and employment both up while price gains contained – "goldilocks". Thus far the market is holding the morning gap up. Looks like Dow 14K is in sight today, get the Tshirts out. Full report below.
"The PMI™ registered 53.1 percent, an increase of 2.9 percentage points from December's seasonally adjusted reading of 50.2 percent, indicating expansion in manufacturing for the second consecutive month. The New Orders Index registered 53.3 percent, an increase of 3.6 percent over December's seasonally adjusted reading of 49.7 percent, indicating growth in new orders. Manufacturing is starting out the year on a positive note, with all five of the PMI™'s component indexes — new orders, production, employment, supplier deliveries and inventories — registering above 50 percent in January."
WHAT RESPONDENTS ARE SAYING …
- "Fiscal cliff, uncertainty in general and EU economic weakness are factors causing our customers to be very tentative with commitments for product purchases in 2013." (Machinery)
- "Midwest drought impact will be felt at least through midyear, impacting protein, sweeteners, eggs, oils, emulsifiers, etc." (Food, Beverage & Tobacco Products)
- "Slowing interest in high-dollar purchases reflects continuing economic uncertainty." (Miscellaneous Manufacturing)
- "Expenditure and investment are expected to remain high in North America in Q1 and Q2, 2013." (Petroleum & Coal Products)
- "Housing sales are trending upward in light of overall market uncertainty, translating to improving optimism in appliance market." (Electrical Equipment, Appliances & Components)
- "Still waiting for reaction to consumer tax increases." (Fabricated Metal Products)
- "Government spending is very low, probably due to the fiscal cliff and the looming debt ceiling." (Transportation Equipment)
- "Business is improving." (Furniture & Related Products)
- "The general theme developing in our industry is that we can move suitable volumes. However, profit margin is elusive." (Wood Products)
- "Overall production volume decreasing. Decrease is led by decline in exports of 10 percent." (Chemical Products)
|MANUFACTURING AT A GLANCE
|New Orders||53.3||49.7||+3.6||Growing||From Contracting||1|
|Customers' Inventories||48.5||47.0||+1.5||Too Low||Slower||14|
|Backlog of Orders||47.5||48.5||-1.0||Contracting||Faster||10|
*Number of months moving in current direction
Indexes reflect newly released seasonal adjustment factors.
Any securities mentioned on this page are not held by the author in his personal portfolio.