United States

Robust manufacturing expansion likely to continue

Data paves way for Fed rate hike in December


The detail inside the Institute for Supply Management’s (ISM) Manufacturing Index published Nov. 1 implies robust expansion in the sector will continue. Both the forward-looking production and new orders subindexes are pointing to a sustained period of strength in the final two months of the year. This data is consistent with the fed’s policy path, which will likely result in an additional 25 basis point interest rate increase in December. In our estimation, this data should also pave the way for the central bank to upgrade the overall economic outlook at the December meeting.

While the focus will be on the topline reading of 58.7, which is slightly above the six-month average of 57.9, the real story is in the details, all of which indicate strong demand for manufactured goods in the United States and abroad.

MIDDLE MARKET INSIGHT: According to the third quarter RSM US Middle Market Leadership Council Survey, 56 percent of middle market executives are anticipating price increases for goods and services (excluding labor) six months ahead. Click here to see the full survey.

Backlogs remain elevated due to increased demand associated with the rebuilding following Hurricanes Harvey and Irma. Not surprisingly, prices paid also remain elevated at 68.3, well above the six-month average of 63.3, which reflects the draw on resources linked to reconstruction in Texas and Florida. Most encouraging is the 56.5 reading in the new exports subindex which is a function of the global synchronized recovery.

ISM manufacturing indicates easing in sentiment


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