Infrastructure
ISM Data Supports Japan & US Recovery Back Underway
Published:
Last Updated:
The weakness we saw through much of the second quarter may have already started to turn around. The slowing was likely due to major supply chain issues and disruptions in orders and in sales that followed the Japanese quake, subsequent tsunami, and nuclear meltdown. This belief is supported by a higher ISM report.
The Institute for Supply Management reported that June manufacturing index rose to 55.3%. This was above the May reading of 53.5% and well above the 51.8% expected by economists surveyed by Dow Jones.
The prices-paid index was 68.0%, down considerably from the 76.5% reading in May. That is a sign that wholesale inflation is truly abating and a signal that consumers will not have to swallow a heavy dose of inflation in consumer goods.
What is interesting is that the employment component also rose, up to 59.9% in June from 58.2% in May. That won’t be enough to create any massive change in unemployment. The 400,000+ weekly jobless claims is going to likely keep a lid on that and the continued lack of conviction from CEOs and CFOs is capping that as well.
New Orders rose slightly to 51.6% in June from 51.0% in May; the production index rose to 54.5% from 54.0%; and the inventories component rose to 54.1% in June from 48.7% in May. That inventory figure may be from a lack of sell-through activity or it could be a building anticipation that orders will start to pick up. The readings for new orders and production are still low enough that there will be some debate over whether or not this is real business recovery anticipation or not.
What we are seeing now is hopefully a slight recovery from the weakness we started seeing in April and May economic data. Japan appears to be coming back on-line, but China is still capping its growth as seen in recent weak manufacturing data there.
QE2’s end should already be priced into the markets, but bond yields and stocks are likely to continue rising if the business climate truly signals a stronger recovery. Stay tuned.
JON C. OGG
Are You Still Paying With a Debit Card?
The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.
Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!
Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!
Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.