ISM industry breakdown – August 2016
Charts of interest from July’s ISM purchase managers survey’s for manufacturing and non-manufacturing sectors. Above clearly demonstrates as to why I am bullish on the US stock market for the months ahead.
On the face of it business activity remains elevated, albeit two lower spikes below 55 over the past 6 months. Take note of the annual rate of change below, which suggests the lack of momentum could be followed by the lower index (as momentum precedes price).
The employment component will warrant closer attention as we head into 2017. The manufacturing PMI employment index was contracting in Q4 ’15 and only in recent months have we seen this reflected in the NFP data. However, if services employment takes a dip then I would expect a harsher follow-through to the headline employment data as we head into next year.