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Analysis

US manufacturing survey strong

by Gabriel Stein

Mon 6 Jan 2014

US manufacturing survey strong Enlarge Chart loading Image

What the chart shows: The chart shows the net between the two ISM sub-indices for new orders and inventories, plotted against the 12-month change in US industrial production.  

Why the chart is important: The ISM survey is the foremost American survey of the manufacturing sector. The difference between the new orders and the inventories sub-indices has historically been a reasonable guide to the near-term trend of industrial production. Over the past six months, this difference has trended higher, implying that the growth in US industrial production will accelerate in early 2014. This confirms other indicators that point to US activity accelerating in 2014. That being said, the new orders/inventories difference is only slightly above its long-term average (10.6 in November and December 2013, against a post-1948 average of 8.6), which indicates that the upturn will remain subdued by past standards.

Chart and comments provided by Stein Brothers (UK) www.steinbrothers.co.uk