Monday, January 4, 2010

Data Continues to Point to Slow, Steady Improvement

From today's Wall Street Journal:

The ISM's manufacturing purchasing managers' index rose to 55.9 last month, from 53.6 in November. December's reading was above the 54.0 forecasted by economists surveyed by Dow Jones Newswires. Readings above 50 indicate expanding activity.

"The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9, its highest reading since April 2006 when it registered 56," said Norbert Ore, who directs the survey for the ISM.
The ISM's new orders index increased to 65.5 last month, from 60.3 in November, while the production index rose to 61.8 from 59.9. Both indexes suggest orders and output were increasing strongly in December.

Factory employment also showed gradual improvement. The index stood at 52.0 in December, from 50.8 in November. Economists expect total December payrolls to show little change when government data are released Friday.

The fly in the latest ointment continues to be weak construction spending and a job picture that is still ugly.  I don't expect good news on either of those fronts for some time. Thus, the real question for 2010 remains just how much weight to give the negatives of jobs and housing against the positives that are unfolding.

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