October 2017 Institute for Supply Management

Economic output remained robust during October 2017 according to data from the Institute for Supply Management (ISM).  Measures quantifying the health of both the manufacturing and service sides of the economy suggest output is strong.  Despite a modest cooling in the manufacturing tally (58.7 versus 60.8 in September), this cyclically sensitive portion of output remains well ahead of the breakeven count of 50.0.  Even better, services (aka nonmanufacturing) demonstrated improving strength as the reading for the largest segment of output moved up to 60.1 from 59.8 in the prior period.

Manufacturing’s immediate future should remain bright according to details beneath the headline.  After putting in a four-year high of 64.6 in September, new orders experienced a slight dip to 63.4, but this is still a convincing reading as to the health of manufacturing.  In the near-term, these orders will most likely become output and propel our economy further.  Both employment and export data resonated with the idea of a stable economy as well.   

Nonmanufacturing continued delivering robust figures also.  Its reading of 60.1 is the best of the current expansion, and the tally has not been higher since 2004.  Like its manufacturing counterpart, new orders are above 60, boding well for near-term output.  Mining and construction figures are also included in this survey, and they were both particularly vigorous. 

From the vantage point of ISM data, America’s economy is planted firmly in the virtuous portion of the business cycle.  Once the next downturn begins to unfold, this indicator could be one of the first to show signs because it contains both forward and coincident components and is reported just days after a given month ends.  However, there are no signs of slowing.  For now, America’s trend has a positive trajectory.