Nonetheless, the outlook for manufacturing remains mixed at best. Yesterday’s November update of the Empire State Manufacturing Survey was surprisingly weak in the New York Fed region, suggesting that a sustained turnaround for the sector may not be imminent. The virtually flat reading of the ISM Manufacturing Index for October echoes that view.
On the other hand, Markit’s purchasing managers’ index (PMI) for manufacturing supports today’s upbeat manufacturing numbers from the Fed. In contrast with the gloomy data from other sources, the headline PMI reading increased to a six-month high last month. Chris Williamson, chief economist at Markit, earlier this month said:
Factory output growth accelerated, equivalent to around a 4% annualized rate of increase, as firms saw the largest monthly jump in new order inflows since March. Export growth has also revived, suggesting firms are managing to adapt to the stronger dollar, as job creation picked up after slowing in September.
Today’s hard data from the Fed report supports the case for expecting a turnaround in manufacturing, although confirmation from the ISM numbers and the regional Fed benchmarks would strengthen the case for optimism.
Perhaps Thursday’s November data from the Philly Fed will provide more evidence that manufacturing is stabilizing. The crowd’s looking for a relatively upbeat report for this month’s reading of this regional index. Econoday.com’s consensus forecast sees the Philly Fed’s general business conditions index rising to a flat reading after two monthly declines. That’s hardly a strong signal, although it would mark the highest reading in three months… if the forecast is accurate.