US manufacturing activity expands at fastest pace in five months – TD Economics

The Institute for Supply Management (ISM) manufacturing index rose 1.3 points to 53.2 in November, recording the fastest pace of expansion since June, notes Neil Shankar, Economist at TD Economics.

Key Quotes

“The reading was well above consensus expectations, which called for a more modest uptick to 52.5.  

“Key Implications

• Report suggests the manufacturing sector remained on a solid footing in November, despite the strengthened currency and significant policy uncertainty related to the U.S. election. Most subcomponents recorded modest to moderate gains on the month and the spread between new orders and inventories remained at a healthy level, suggesting that the manufacturing sector should continue to grow. 
• The decline in the exports subcomponent, while minor, highlights the divergence between externally exposed and domestically-oriented manufacturers. Overall, the dollar is expected to remain elevated as the Federal Reserve continues on its gradual hiking cycle in less than two weeks' time, adding further pressure for externally exposed manufacturers. 
• On a more positive note, it appears the external environment is improving. November PMIs across Asia and Europe have been broadly higher, suggesting global manufacturing activity is on a modest upward trend. The recent rise in oil prices, which should keep domestic drilling activity rising modestly, will support investment in the energy sector going forward following several quarters of drag. All of this should keep American factories humming along in the coming months.”