Commentaries

Looking for expansion in manufacturing

Agnes Crane

Sep 1, 2009 12:33 UTC

The Institute for Supply Management will release its latest survey on manufacturing at 10am, and all eyes will be on the headline index which should finally break through 50 – the break even mark between expansion contraction.

Moody’s economist John Lonski is looking for 50.7, which would be the best showing since January 2008 and further sign that the bad old days of the post-Lehman tailspin are behind the us.

You can find the release here at 10am.

Why the carmaker in front is cutting back

Neil Collins

Aug 26, 2009 12:33 UTC

Good news: global car capacity is being cut by 700,000 vehicles. Bad news: the company doing the cutting is the world’s most efficient manufacturer, Toyota.

Across the world, governments are pledging money to keep local plants open, mostly plants which have no long-term future, and which are far less efficient than the production line in Japan that Toyota is closing.

ISM has 50 in its sights

Agnes Crane

Aug 3, 2009 15:17 UTC

The latest data out on U.S. manufacturing is encouraging to say the least. Coupled with a similar improvement in Europe and it’s easy to get caught up in the giddy feeling that has definitely gripped the stock market.

The Institute for Supply Management reported that its headline U.S. manufacturing index hit 48.9 in July, above expectations and just shy of 50 – the breakeven point between expansion and contraction. New orders and production were both above that threshold, which points to future growth.

from John Kemp:

U.S. nonfarm payrolls signal turning point is near

John Kemp

Jun 5, 2009 13:00 UTC

Businesses outside the farm sector plus federal, state and local governments continued to eliminate positions on net last month (-345,000) but the rate of job losses was the smallest since the recession worsened in Sep 2008.  
 
The data is consistent with recent business surveys suggesting the pace of contraction is slowing, and the turning point in the economic cycle is drawing near. 
 
The relatively small decline in nonfarm payrolls should be reflected in a smaller decline in industrial output when the Federal Reserve reports its May 09 estimate later this month (not least because the Fed bases its estimate, in part, on the payroll data). 
 
In the past two months, the data flow has become consistently positive, in the sense that it points to a slower rate of decline and a nearing end to the contraction phase of the cycle, helping fuel the broad-based rally across equity and commodity markets.  Today's data will reinforce that optimism, and has already sent WTI futures (briefly) back above $70. 
 
(Un)-employment is a lagging indicator.  Job losses are likely to continue even once the economy starts to expand again and will act as a (moderate) drag on growth going forward (as well as contributing to further defaults on home mortgages and consumer lending over H2 2009 and throughout H1 2010). 
 
But the payrolls report does indicate the worst of the downturn is now over.