Back
4 Jun 2013
Flash: ISM consistent with GDP slowdown - Nomura
FXstreet.com (Barcelona) - Nomura economists note that in May, the ISM manufacturing index fell to a reading of 49.0 compared to 50.7, marking the index´s first foray into contraction territory since November 2012.
They see that the index has also fallen for a third straight month, in line with the broader slowdown in the economy since a fast and furious start to the year. They write, “To-date in Q2 the ISM index has averaged a reading of 49.9, broadly consistent with GDP growth between 1.5% and 2.0%%. Our tracking model for Q2 GDP currently points to an annualized pace of 1.3%.”
They feel that though the sub-50 reading for the ISM was surprising, they had expected the index to weaken in May based on the performance of other regional surveys. Further, in May, the measures of manufacturing from both the Philadelphia and New York Federal Reserve Banks were below 50. They see that the outlier was last week´s release of the Chicago PMI in which the ISM-adjusted index popped higher following sharp declines in March and April. They write, “The big swing in the Chicago PMI follows two months of weakness that possibly reflects payback from the effects of inclement weather in the Midwest region.”
They see that the index has also fallen for a third straight month, in line with the broader slowdown in the economy since a fast and furious start to the year. They write, “To-date in Q2 the ISM index has averaged a reading of 49.9, broadly consistent with GDP growth between 1.5% and 2.0%%. Our tracking model for Q2 GDP currently points to an annualized pace of 1.3%.”
They feel that though the sub-50 reading for the ISM was surprising, they had expected the index to weaken in May based on the performance of other regional surveys. Further, in May, the measures of manufacturing from both the Philadelphia and New York Federal Reserve Banks were below 50. They see that the outlier was last week´s release of the Chicago PMI in which the ISM-adjusted index popped higher following sharp declines in March and April. They write, “The big swing in the Chicago PMI follows two months of weakness that possibly reflects payback from the effects of inclement weather in the Midwest region.”