Stock Picking Based On ISM Manufacturing Index, January 2012

By Ronald RutherfordThe experts got the general directions of the ISM reports correct this last month. While there is no break-out to indicate increased overall strength of the economy or the return to the dreaded double-dips, both reports showed consistent growth, which should translate into economic growth of over 3.5% in GDP annually according to Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee.

By Ronald RutherfordFair to Middling for Manufacturing, Good News for the Services SectorsManufacturing missed the consensus range of 54%-55.5% by over 1.5% to 52.4% and well below the consensus point of 54.6%.

Note: The traffic this morning overwhelmed the graph server. I'm working with the provider, and it appears everything is OK now. Here is the Employment graph gallery.The May ISM Non-manufacturing index was at 54.6%, up from 52.8% in April. The employment index increased in May at 54.0%, up from 51.9% in April. Note: Above 50 indicates expansion, below 50 contraction.

Ronald Rutherford submitsWhile the Manufacturing ISM Report showed general weakness in the indexes and an overall drop in the PMI, the Non-Manufacturing ISM Report showed a significant drop in the headline NMI index, as well as a dramatic drop in new orders.

The Non-Manufacturing ISM for August came in positive one again showing a clear divergence between manufacturing and services.

By Ronald RutherfordWhile the newest ISM reports did not indicate the start of a double-dip recession, both reports were weaker than expected.

Tomorrow the BLS will release the May Employment Situation Summary at 8:30 AM ET. As I noted in the weekly schedule, the consensus forecast for payroll jobs seems too high; Bloomberg is showing the consensus is for an increase of 190,000 payroll jobs in May, and for the unemployment rate to decline to 8.9%.