In contrast to the regional reports, manufacturing sector activity accelerated nationally in the month of April.
Actual: 54.7 (73.0)
Consensus: 51.0 (67.8 Prices Paid)
Previous: 50.9 (65.5 Prices Paid)
In contrast to the regional reports, manufacturing sector activity accelerated nationally in the month of April. The ISM manufacturing report matched its May 2006 reading while prices paid matched the August 2006 reading. This is the best number that we have seen in 11 months which suggests the manufacturing sector may really be bottoming out. Prices paid also saw a sharp jump which indicates that inflation pressures remain a problem. The employment component of the report rose from 48.7 to 53.1, which is also the best print since August. All of the numbers released today continue to support the Federal Reserve’s need to keep interest rates steady. Going into non-farm payrolls, the improvement in the employment component suggests that we could see positive manufacturing sector payrolls figures. With the economy mostly dependent on services however, we would still need to see strength in service sector employment vis a vis the non-manufacturing ISM number before banking on a much better non-farm payrolls release. Capping gains in the dollar was the sharp drop in pending home sales. The housing market is struggling to stay afloat and the latest indicators signal a potential downturn.
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