The US ISM report for manufacturing was generally solid. New orders are back to the highs from 2013 and the employment index is at the highest level since June 2011. It points to a strong start to Q3. Looking forward, we expect the ISM to moderate somewhat, as we believe growth will move down a gear from 4% in Q2 to 3.0-3.5% in H2. This is still quite decent though and should imply a continued declining trend in unemployment.
The strength of ISM fits well with the positive development in goods consumption over the past quarter. Part of this is still rebound from the weak Q1 though, so this also suggests we will see a slight moderation of the ISM looking ahead.
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