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By New_Deal_democrat October 4, 2016 11:45 am
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Better news from September ISM manufacturing and vehicle sales
We got our first look at September monthly economic data yesterday with the release of the ISM manufacturing and motor vehicle sales reports.  These are noteworthy every month because both are valuable short leading indicators on the production and consumption side, respectively, usually by about 6 months.  They assumed an additional importance because August data was pretty miserable just about across the board.
 
And there was modest good news on both fronts.
 
First, the manufacturing report moved back into positive territory from last month's month's contractionary reading (h/t Doug Short http://www.advisorperspectives.com/dshort/updates/2016/10/03/ism-manufac...):
 
 
 
Secondly, the more leading new orders component of the ISM moved strongly back into expansion, with a reading of 55.1, confirming the improvement from the regional Fed reports.  Unfortunately I can no longer show you this via a FRED graph, but here is the list of New Orders reports this year:
 
J 51.5
F 51.5
M 58.3
A 55.8
M 55.7
J 57.0
J 56.9
A 49.1
S 55.1
 
With the exception of August, New Orders have been strongly positive since February of this year, suggesting that industrial production will probably continue to improve from its recent bottom in March:
 
 
Turning to motor vehicle sales, we see a similar pattern -- the decline readings appears to have bottomed out a few months ago and there is now modest improvement, albeit not back to the peak readings from one year ago (h/t Calculated Risk):
 
 
Historically, motor vehicle sales tend to have a broad plateau before a significant decline begins a few quarters before the onset of a recession.  Yesterday's report suggests we are still on that plateau.
 
In short, these two short leading indicators suggest -- appropriately enough for the meteorological season, that despite a poor August, the economy remains in Indian Summer -- a period of decent if not great growth during its gradual deceleration from the mid-cycle peak of several years ago.
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