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US: ISM preview, June

Wed, Jul 1 2009, 07:01 GMT
by Signe Roed-Frederiksen

Danske Bank A/S


  • The US ISM manufacturing index breached the 42 level in May, indicating that the overall economy is now expanding again. The details strongly suggest that the ISM will move higher in the coming months The New Orders index increased to 51.1 indicating that order growth is back in the black and the balance between inventories and new orders is signalling a very bullish trend for the ISM.
  • The readings from the local indices have again been slightly mixed this month, but overall the reading from the local surveys is positive. The local indices suggest an ISM reading of 44.5. Taking other variables into account as well, we expect Monday’s ISM index to post an increase to 45.6, which is slightly higher than the consensus forecast of 44.6.
  • Going forward we continue to expect that the ISM index will move higher. Our target is for the index to breach 50 by late-summer. That said the problems in the auto industry are a near-term factor of uncertainty. The underlying trend nevertheless remains up, as production growth is expected to pick up in order to close the massive gap between demand and supply.

Published on  Wed, Jul 1 2009, 07:03 GMT

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

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