Manufacturing new orders are booming – reliable sign of improving employment and eco. growth

The Institute of Supply Management just released the August index for manufacturing activity.  The reported diffusion index level of new orders was 63.2, the highest since April 2011.  More importantly, the rate of improvement in the index as expressed as the increase over the trailing 6 month average was the best since the big economic recovery in early 2009 and before that February 2002 and June 1991.  The point here is that a sharp recovery in the new orders index as we have just seen is very uncommon and has tended to lead to accelerated economic growth in the coming months – and a rising stock market.  Since 1980, the S&P 500 has been up 4 out of the five times we have experienced similar new order action.  It rose an average of 4.8% in the following quarter.  It has been up an average of 9.6% in the 4 positive quarters.  BTW – employment also accelerates.  Sounds good to me . . . Jeb B. Terry, Sr. Sept. 4, 2013

Mfg New Orders and Emp 9-3-13

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