December 2, 2013
Statement From LIA Chief Economist John Rizzo on ISM Manufacturing Index Results
By: Dr. John A. Rizzo
"The Institute for Supply Management''s (ISM) manufacturing index increased to 57.3% in November 2013 from 56.4% in October, its highest reading in more than 2 years. Levels above 50% indicate economic expansion. Subcomponents of the index showed strong gains as well. The new-orders index rose by 3 percentage points to 63.6% and the production index increased by 2 percentage points to 62.8%.
The stock market however has been flat in response to the ISM report and encouraging news on US construction spending. The good economic news appears to have rekindled concerns that the Fed may taper its pro stimulus policies sooner. This is an unfortunate by product of these strong economic results. But inflation is nonexistent while unemployment remains quite elevated. The better course of action would be to continue the economic stimulus until inflation becomes problematic or unemployment improves significantly."