SOME QUICK THOUGHTS ON THIS MORNING’S DATA
Stocks are off to a very bullish start to 2010 as the consensus looks for gains in 2010. This morning’s ISM manufacturing report showed a continuation in the “better than expected” trend that became such a staple of 2009. The data was quite robust across the board. Norbert Ore, Chairman of ISM had these comments on the report:
“The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9 percent, its highest reading since April 2006 when it registered 56 percent. This month’s report is quite strong as both the New Orders and Production Indexes are above 60 percent. The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the Customers’ Inventories Index. Customers’ inventories have been ‘too low’ for nine consecutive months, and this month’s index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline.”
Comments from respondents were mixed:
- “Capital is tight. The forecast has been lowered for 2010.” (Chemical Products)
- “Nice rebound for our consumer business.” (Nonmetallic Mineral Products)
- “Demand from automotive [manufacturers] remains strong, with some plants not having extended shutdowns during the Christmas holiday.” (Fabricated Metal Products)
- “Still not seeing any increase in production as the economic indicators are suggesting.” (Electrical Equipment, Appliances & Components)
- “Business remains steady and strong.” (Primary Metals)
All in all, the data was bullish and sets a positive tone for the beginning of the year. As we said in our 2010 outlook we very much expect this trend to continue throughout Q1 and likely into Q2.
