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US ISM Manufacturing PMI Rises

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US ISM Manufacturing PMI Rises

The US Institute of Supply Management (ISM) figures for the month of April have just been published. The key ISM Manufacturing Purchasing Managers Index (PMI) is showing a further gain on the month to 54.9, up from the March number of 53.7 and also beating the consensus estimate of 54.3.

The ISM also released it’s Prices Paid figure, this indicator of inflationary pressures in the manufacturing sector has fallen to 56.5 from 59.0 in March, there was a reading of 59.1 expected by market economists.

Also adding to the US inflation picture was the publication of the US Census Bureaus Construction Spending number. This has come in at 0.2%, up from the previous month’s number of -0.2% but falling short of the 0.6% anticipated by the economists poll.
Markit Economics earlier this afternoon published it’s version of a Manufacturing PMI statistic. This respected measure confirms the ISM suggestion of expansion in the manufacturing sector, the reading for April is 55.4 which is a slight fall on March’s 55.5, consensus estimates were for a number closer to 55.3.

Improvements in the manufacturing sector are very welcome at this point in the American economic recovery process. The challenge for the authorities at this point is to ensure that the success in this sector does not create excess inflation in the economy until such a time as other sectors, such as construction, are given the opportunity to catch up.

The construction sector, particularly public infrastructural projects are being under invested in currently. The US has an opportunity to cheaply fund capital projects that will have the double benefit of providing a more stable base for future growth but also of creating much needed employment opportunities in the short term.

Tomorrow’s crucial Non Farm Payroll data and official Unemployment data will give an indication as to how urgently this infrastructural investment is required.

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