ISM Manufacturing and Consumer Sentiment in February Surge Past Expectations

Today’s ISM Manufacturing Index for February came in at 54.2, which is above the Bloomberg consensus of 52.8 and at the higher end of the 52.0 to 54.5 range. Rather than ticking down from the 53.1 reading in January, this was a boost. It also marks another month that is the best reading since last May. A reading above 50 indicates growth and a reading below 50 means contraction.

And who said American manufacturing was dead? One thing we would note is that prices paid was the largest reading here, and that may be skewing the report if you just go past the headline report. That rose to 61.5 from 56.5 the prior month. Inventories rose a half-point to 51.5, employment ticked down to 52.6 from 54.0 the prior month, new orders rose to 57.8 from 53.3, and production rose to 57.6 from 53.6.

The University of Michigan consumer sentiment reading was revised higher from the preliminary figure two weeks ago and came in above estimates. Today’s revision was raised to 77.6, versus the preliminary figure of 76.3. Bloomberg was calling for a reading of 76.0, and its estimate range from economists was 75.5 to 76.5. In short, the revision was higher than every single economist in the Bloomberg consensus. As this is a number released in a far more private manner than traditional economic reports, we are withholding the individual component data from the report.

We would remind investors about this consumer sentiment reading that its is a revision and also that this is a survey from only 500 households. It is a far smaller sample than the true consumer confidence report from the Conference Board. That being said, the preliminary data released is a the first live sentiment reading that is widely distributed each month, so it does influence the market.