US ISM manufacturing increases above expectations in November - Natixis

Thomas Julien, Research Analyst at Natixis, notes that the US ISM manufacturing index surprised on the upside in November (+1.3pts to 53.2) and the increase was driven by new orders (a leading indicator), production and inventories.

Key Quotes

“The employment component declined slightly but remained above 50. All in all, today’s ISM is consistent with the activity stabilizing in the manufacturing sector.

• ISM manufacturing increased from 51.9 to 53.2 in November, above expectations (consensus 52.5 / Natixis: 51.5). The increase was driven by production, new orders and inventories components. The employment component deteriorated slightly but remained above 50.  
• ISM prices paid index (not included in the overall ISM index) remained flat in November (at 54.5) in line with the stabilization in oil prices during the month.  
• In short, report surprised on the upside but is generally consistent with regional surveys. Overall, the information coming from surveys is consistent with a modest expansion of manufacturing activity in the short run. In the medium run, the still muted global demand as well as the USD strengthening are likely to keep curbing the activity in the sector.   
• As for our employment forecast, since the employment component declined slightly but remained above 50. Looking at all the available leading indicators the risk on our NFP projection (+185K for total NFP) remains upward.”