Market Commentary

ISM Report on Manufacturing for August

etf vs etn

There is no doubt that the economy will continue to grow despite small cracks in the housing sector as sales and new home construction weakens.  Yesterday the ISM report on manufacturing for August came in at a 14 year high with a reading of 61.3 (anything over 50 is seen as expansion and fewer than 50 as contraction for that sector). The expectations were for it to fall to 57.9% from 58.1% in July.

The best part of the report, and the one that drove the number sharply higher, was the new orders index rising 3.2 points to 65.1. How this report is compiled is through a survey of executives who order raw materials and supplies for their companies. It is a report produced by the Institute for Supply Management and tends to rise and fall with the economy.

The conclusion is that the very good growth continuing into the third quarter, though a spike in imports will likely slow the GDP number. Another interpretation could be that the trade difficulties has meant that supply managers are ordering more raw material then they need to get ahead of the higher tariffs on certain goods.

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