Tuesday, February 01, 2011

Manufacturing Continues as Recovery's Shining Star

The Institute for Supply Management (ISM) released its monthly report today on economic activity in the manufacturing sector for the month of January, with the following highlights:

Economic activity in the manufacturing sector expanded for the 18th consecutive month in January, and the overall economy grew for the 20th consecutive month.

2. The composite PMI increased last month to 60.8%, a 2.3 point increase from 58.5% in December, and the highest level  for the PMI since May 2004 (see chart above). 

3. According to the ISM, "The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals."

4. The ISM Employment Index increased in January to 61.7%, which is the 16th consecutive month of growth in manufacturing employment and the highest reading for the ISM manufacturing employment index since April of 1973.

5. The New Export Orders Index increased to 62% in January, marking the 19th consecutive month of growth in export orders.


At 2/01/2011 12:55 PM, Blogger Benjamin Cole said...

Die, recsssion, die, die, die!

Dow up 100 points today, and this bull market will have more legs than a centipede.

The great global boom is back, baby, and huge fortunes will be made everywhere.

At 2/01/2011 1:11 PM, Blogger PeakTrader said...

U.S. Export Growth To Continue into 2011, Reports The Journal of Commerce
Jan. 4, 2011

"Fueled by a growing Asian middle class, overseas crop issues and a weak U.S. dollar, demand for U.S. goods from agriculture to manufactured products is accelerating. Congressional approval of a recently negotiated U.S.-South Korea free trade agreement stands to push those exports upward dramatically... the Administration's goal of doubled exports by 2015 is looking more and more possible."

America and the Middle East Food Riots
January 31, 2011

"Today there is a global food shortage and skyrocketing prices. This has become the underlying factor in the riots in Tunisia, Algeria, and Egypt, where up to 56% of a person's income is dedicated to the acquisition of food.

In 2010, the United States produced 13.1 billion bushels of corn. Of that amount, 4.2 billion bushels went into ethanol (33% of total production).

Commodities are priced in dollars; consequently, emerging markets throughout the world, and the food sector in particular, are suffering from rapidly rising inflation.

The CRB food index is up an incredible 36% over last year. Raw materials are up 23%.

There is no quicker way to foment riots and revolution than to deprive the populace of food, particularly when so much daily income goes into feeding oneself and one's family."

At 2/01/2011 1:14 PM, Blogger Buddy R Pacifico said...

Exports greater then imports is excellent news and hopefully a long term trend.

Inventories are higher but customer inventories are lower. Hmm. Could be worried about inflation of raw material prices so, build-up before prices rise.

Prof. Perry has informed us of increased Rail Traffic leading to increased manufacturing for quite a few months.

At 2/01/2011 1:19 PM, Blogger PeakTrader said...

"The American decision to, in essence, burn food in its cars, a policy championed by the environmentalists since the 1990s...over 14% of all corn grown in the world being used in the most inefficient manner possible -- being put into American gas tanks."

At 2/01/2011 3:05 PM, Blogger Unknown said...

what's with the use of % or pct? it's an index!

At 2/01/2011 6:51 PM, Blogger VangelV said...

Inflation is a big problem down the road. If the economy recovers oil prices will explode because new production is not capable of offsetting depletion from existing fields. Food prices are exploding and threaten regimes around the world. The weakening USD is forcing many countries to question the wisdom of relying on it.

Eventually the BLS and Fed will not be able to hide the true inflation rate and the entire Ponzi scheme thta is the USD will come crashing down. At that point we might see Americans rioting in the streets because they can't afford food and energy.

At 2/01/2011 9:52 PM, Blogger Rufus II said...

Corn is about $0.12/lb (how many pounds of corn did You eat, today,) and we're exporting as much, or more, than ever.

China's corn crop failed, and they have a few hundred million people that are learning to love "corn fed" beef.

Next year we will have, almost surely, the largest crop in history, and exports will, once again, hit a new record.

But, Global oil production will continue to decline.

In addition, China's oil consumption went from 7.7 million barrels/day in Nov '09 to 10.4 Million Barrels/Day in Nov. 2010. Think that one over.

At 2/02/2011 3:46 AM, Blogger PeakTrader said...

Rufus II, corn prices and oil prices tend to move together.

In 2005 and 2006, corn was below 250 cents a bushel. It spiked to 750 cents per bushel in 2008, fell to around 375 cents a bushel in 2009 and spiked higher again to close at 666 cents per bushel today.

China has very little arable land, either for growing corn or raising cattle:

Shrinking Arable Lands Jeopardizing China's Food Security
April 18, 2006

A survey released last month by China’s Ministry of Land and Resources revealed that the country has lost 8 million hectares, or 6.6 percent, of its arable land in the past decade.

As of November 2005, China had approximately 122 million hectares of arable land, covering 13 percent of its territory. This amounted to 0.27 hectares per capita, less than 40 percent of the world per capita average, one-eighth the U.S. level, and one-half the Indian level.

Most of the land being lost to construction in eastern China is higher-quality agricultural land...Remaining farmlands are also suffering from pollution and soil erosion...one-sixth of China’s total arable lands are polluted by heavy metals, and more than 40 percent are degenerated due to erosion and desertification."

At 2/02/2011 8:15 AM, Blogger VangelV said...

As of November 2005, China had approximately 122 million hectares of arable land, covering 13 percent of its territory. This amounted to 0.27 hectares per capita, less than 40 percent of the world per capita average, one-eighth the U.S. level, and one-half the Indian level.

This is why China has purchased land in Africa and has built railways and ports to transport the food grown to their domestic markets. And why it has made deals with agricultural companies in Brazil, Chile, and Argentina.


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