Comments on recent developments
Following a short rebound in January, ISM fell to 48.3 in February. According to the details, the decline was driven by important sub components such as production, new orders and employment.
This month, the signals from the local indices have been generally positive. Richmond and Chicago rose significantly, while Dallas and New York saw modestly higher readings. However, data from Philly Fed and Kansas have been soft.
Our monthly model forecasts a modest decline of one index point to 47.3 - fairly close to the consensus expectation of 47.5. According to the local indices, the risk may be slightly on the upside. On the other hand, demand for consumer and investment goods has softened considerably in recent months. Moreover, the tendency has recently been for the ISM to lead the local indices. In the next 3-6 months, the ISM is set to grind lower, reaching 45.0 in May/June - just above the recession threshold of 42.
Following a short rebound in January, ISM fell to 48.3 in February. According to the details, the decline was driven by important sub components such as production, new orders and employment.
This month, the signals from the local indices have been generally positive. Richmond and Chicago rose significantly, while Dallas and New York saw modestly higher readings. However, data from Philly Fed and Kansas have been soft.
Our monthly model forecasts a modest decline of one index point to 47.3 - fairly close to the consensus expectation of 47.5. According to the local indices, the risk may be slightly on the upside. On the other hand, demand for consumer and investment goods has softened considerably in recent months. Moreover, the tendency has recently been for the ISM to lead the local indices. In the next 3-6 months, the ISM is set to grind lower, reaching 45.0 in May/June - just above the recession threshold of 42.