ISM Manufacturing Index Rises for December

By Jan 2, 2013, 2:56 PM Author's Blog  

The manufacturing sector closed 2012 on an upbeat note, according to today’s December report for the ISM Manufacturing Index. This widely followed benchmark rose to 50.7, up from 49.5 in November. A reading above 50 is considered a sign of growth and so the manufacturing sector overall is again leaning towards the forces of light rather than darkness, if only slightly.

Today’s report is hardly a robust reading in terms of reversing November’s weakness. But the first major statistical clue for December’s economic profile offers a bit of comfort for thinking that the economy overall will continue to post favorable numbers for 2012′s final month. The November profile of a broad array of indicators certainly looks encouraging, and today’s update on the ISM index leaves room for thinking positively that a bias for growth generally will roll over into December.

ISM Manufacturing Index Rises for December

Still, the fact that the composite ISM index continues to hover around a neutral 50 reading reminds that manufacturing is still vulnerable. Meantime, one might wonder how much damage the fiscal cliff factor inflicted on the economy generally. Yes, the risk has been largely defused, thanks to the tortured yea vote today in the House. That’s probably a net plus for the economy in the near term, but it’s unclear what effect, if any, the long-running debate has already unleashed in terms of reduced growth.

Today’s ISM news, however, offers some support for thinking that the economy still had some forward momentum as 2012 faded into history. The stock market is clearly impressed with the combination of a resolution of the fiscal cliff peril and a relatively upbeat ISM report. As I write this morning, the S&P 500 is up a strong 1.9% in today’s session.

Yup, the macro news in 2013 remains positive… so far. That doesn’t mean much on January 2, but the 1,000-mile journey for the year ahead is off to a decent if still-precarious start.

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