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ECON: ISM Manufacturing Much Stronger Than Expected
Posted to: Micro News
Tuesday, September 03, 2013 10:09 AM
- PMI 55.7 vs 54.0 Forecast, 55.4 previously
- New Orders 63.2 vs 58.3 previously
- Prices Paid 54.0 vs 52.0 Forecast, 49.0 previous
- Employment 53.3 vs 54.4 previously
Market Reaction: Immediate move to the weak side for MBS and Treasuries.
Manufacturing expanded in August as the PMI™ registered 55.7 percent, an increase of 0.3 percentage point when compared to July's reading of 55.4 percent. August's reading reflects the highest overall PMI™ reading in 2013. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI™ in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August PMI™ indicates growth for the 51st consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the third consecutive month. Holcomb stated, "The past relationship between the PMI™ and the overall economy indicates that the average PMI™ for January through August (52.5 percent) corresponds to a 3.2 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI™ for August (55.7 percent) is annualized, it corresponds to a 4.2 percent increase in real GDP annually."
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