|March 2009||March 2013|
Taken directly from February’s ISM services report, business leaders are either seeing higher activity or expecting it. This is very encouraging for economic growth, as services make up 46% of GDP.
WHAT RESPONDENTS ARE SAYING …
- “Our business is beginning to turn up slightly.” (Health Care & Social Assistance)
- “Business seems to be improving; RFQ volume and orders also up.” (Management of Companies & Support Services)
- “Continuing to see slight uptrend in activity, primarily related to 1st quarter initiatives started.” (Finance & Insurance)
- “Construction market showing some positive signs.” (Real Estate, Rental & Leasing)
- “The economy continues to slowly pick up, perhaps at an even faster pace than had been previously projected. New housing permits and business licenses are at a multiyear high, although still lower than pre-recession.” (Public Administration)
- “February bouncing back to forecast levels, which was 11 percent over 2012.” (Wholesale Trade)
- “Business is picking up; more projects to bid and things are improving.” (Construction)
With a resurgent housing market and strong demand for autos, US manufacturing is on a roll. Alliance Bernstein’s Joseph Carson agrees that, “manufacturers are now seeing a rebound in domestic demand especially the early cyclical industries.”
February ISM Manufacturing: +1.1. Gaining for the 3rd consecutive month to 54.2 in February, confusing market expectations for a decline to 53, a forecast oblivious to the majority of strong manufacturing reports so far in 2013. “Continuing the biggest jump in manufacturing activity since the economic recovery started in 2009.” –WSJ.
February’s gain brings this index to its highest level since June 2011, when the index hit 55.8. ‘As was the case in January, all five of the PMI’s component indexes — new orders, production, employment, supplier deliveries and inventories — registered in positive territory in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in February relative to January.” –ISM.
New orders gained 4.5 points to 57.6 (second month of growth and largest jump since March 2010) while new orders for exports gained 3.5 points to 53.5, an encouraging sign of international demand. Exports jumped to a nine-month high. Employment slipped 1.4 points to 52.6 but should stabilize given a 7.5-point surge in backlogged orders to 55. Greater activity translates into higher prices, as the price index moved 5 points to 61.5, the highest reading in all 11 categories.
Global manufacturing growth has unfortunately not been as impressive, as manufacturing data out of China (possible Lunar New Year influence) and the Euro zone disappointed. In the UK, the Markit CIPS manufacturing PMI sank to 47.9 in February from 50.5 the month before. Within the report, new orders at home and abroad fell at the fastest pace in 40 months.
NT_Chart_Library_-_02052013 A fantastic presentation with charts on every aspect of the global economy, from the breakdown of the CPI and dollar weighted index, central bank policy rate charts, US household & government spending, global GDP and inflation, China’s economy & growth, fixed income yield curves. spreads, option adjusted spreads, high yield metrics, default rates, global equities returns and fundamentals, commodities, demographics.
Northern forecasts an average rate of GDP of 1.85% for 2013, with just over 2% growth in the second half. Slightly conservative compared to the street’s average 2.4% estimate.