• December’s manufacturing ISM index could not hold momentum last month and thus showed decline to 53.6 from 55.7. However, the sub-indices signalled an upward momentum in the overall index as the new orders-inventories balance improved after two months of decline. The employment index fell back last month, but with a reading of 50.8 the sub-index is signalling positive growth in total private employment.
    • The local surveys have again been positive and are signalling an increase in the nationwide ISM of around 0.6 index points. However, the production sub-index declined in December in almost every region. The overall level of the local surveys is still subdued compared to the nationwide ISM index. Nevertheless the increase in the local surveys support our expectations for an increase in the ISM index tomorrow
    • Today we expect an increase in the ISM index. We see last month’s decline as a temporary “bump on the road” and as the new orders-inventories balance improved last month this would point to a further increase in the ISM index.
    • We still believe that there is more upside to the ISM index. The heavy production back-log in the US economy is currently sending the most positive signal for the ISM seen in the past 40 years. However, as the upward momentum probably has peaked for now, we believe that the future improvement is likely to happen in a slower pace than earlier.