The August U.S. ISM Manufacturing Index rose 0.3 to 55.7
exceeding the trade estimate of 53.8. The index has
displayed strength in recent months and recorded three straight
positive surprises. New orders rose 4.9 to 63.2,
production eased 2.6 to 62.4, and employment fell 1.1 to 53.3.
Breath was healthy with 15 of 18 industries reporting growth and
only 1 industry, miscellaneous, reporting contraction.
Inventories may be positive for future output:
Of interest, the customer inventories question revealed that only 1
industry saw inventories being too high. In contrast, 10
industries saw inventories too low. The customer
inventory assessment was more bullish for growth than the firm
review where 9 industries reported decreased inventories and 5
industries reported higher inventories. The inventory
situation seems positive for future production.
Other Developed regions of interest:
Globally, there appears to be a revival in growth. Here
are a few highlights:
The UK CIPS/Markit PMI rose 2.6 to 57.2, hitting a two and half
The Canadian RBC manufacturing PMI rose 0.1 to 52.1, showing its
fifth straight month of expansion.
The August Markit EZ manufacturing index hit a 26 month high rising
1.1 to 51.4 with Greece (48.7), Spain (51.1), and Italy (51.3)
reaching 44, 29, and 27 month highs respectively.
Japan's August Manufacturing PMI rose 1.5 to 52.2 suggesting
The August Australian Manufacturing PMI rose 4.4 to 46.4, but
remains under 50.
The August Chinese Manufacturing PMI published by the National
Bureau of Statistics rose 0.7 to 51.0 showing an uptrend, while the
HSBC Markit PMI was barely in growth territory at 50.1, but up from
the 47.7 reading in July. China is not booming, but holding
However, other areas of the EM remain fragile. Brazil's PMI rose
0.9 to 49.4 and remains below 50.0, while India's PMI sank 1.6 to
48.5. South Korea's manufacturing PMI rose 0.3 to 47.5 and remains
depressed. Russia's PMI rose a hair to 49.4. The
developed world is leading global activity.
Operating profits for the S&P industrial sector are expected to
rise 7.1% y/y in Q3 2013 and post their strongest growth rate since
Q3 2012. However, they are forecast to contract 1.1%
sequentially. Profits for the sector have been struggling since Q2
2012 on a sequential basis.
1) Does the strength in manufacturing PMIs suggest the
slowdown in non-financial profits is coming to an end? 2) Will the
information be strong enough to push stocks higher in the month of
Let me know your thoughts below:
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