Dear Readers,
We start the New Year with a host of reports this week that should tell us about the health of the U.S. economic recovery. We will read about the manufacturing side of the economy (today), then the services side (Wednesday), and finally about the labor market (Friday). Overall, we should see continuation of the constructive trend that has remained in place over the last few months.
The ISM Manufacturing Index today is expected to show a modest gain over November’s 56.6 level. Manufacturing, which accounts for roughly 11% of the U.S. economy, has been in the forefront of the economic recovery, with the inventory restocking process driving gains.
We have been seeing in regional surveys an overal improving trend in the nation’s manufacturing picture. An improvement in the December ISM Index would be inline with the Philly Fed and Chicago PMI surveys, taking the index to its highest level in seven months. Strong domestic holiday sales is putting manufacturing gains on a more sustainable trajectory.
We had some impressive gains in the stock market last month, which will most likely be difficult to replicate in the New Year’s first month. But look for the momentum to resume if we get a solid payroll report on Friday.
Irrespective of these day-to-date moves, we start 2011 at a much better footing than the last few years.
Happy Investing,
Sheraz Mian
