Manufacturing Continued to Advance in October

The Institute of Supply Management released their October report on November 2nd and the report surprised analysts on the upside. The October purchasing managers index, PMI registered 59.0 up from the 56.6 reading in September and equal to the August result. Any number >50 indicates expansion and this was the seventeenth straight month in which this was the case. The three month moving average, (3MMA) advanced from 57.57 in September to 58.2 in October, this was the twenty fifth consecutive month of a value >50 in the 3MMA. This month we decided to review the relationship between the ISM manufacturing index and durable goods orders, (Figure 1). We found the correlation to be 73.8 percent with no discernible lead / lag relationship between the two, but the correlation is encouraging in that the growth of each is supported by the other independent data set.