December 1, 2011 / 4:16 PM / 6 years ago

Instant view: Factory activity rebounds in November

NEW YORK (Reuters) - U.S. factory activity rebounded in November to its highest level since June, according to a private survey of the nation’s purchasing managers.

CONSTRUCTION SPENDING:

U.S. construction spending increased more than expected in October as investment in private building projects touched its highest level in nearly two years, adding to hopes of sturdy fourth-quarter economic growth.

KEY POINTS: * The Institute for Supply Management said its purchasing managers index rose to 52.7 in November, up from 50.8 in October, better than anticipated. New orders, production, prices, and exports all improved. * A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction.

COMMENTS:

BRADLEY J. HOLCOMB, CHAIR, ISM BUSINESS SURVEY COMMITTEE:

“The PMI increased nicely, showing solid gains in new orders and gains in production. Employment continued its growth for the 26th consecutive month and prices of raw materials are down for the second consecutive month. The optimistic tone I talked about last month continues. All in all, a very good month for manufacturing.”

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON D.C.:

“This data adds to the growing list of positive economic numbers that are supportive of risk appetite. As such, the dollar is falling against most of its major counterparts. The Aussie and Kiwi are erasing some of their overnight gains, which is a barometer of improving risk appetite.”

MILLAN MULRAINE, SENIOR MACRO STRATEGIST, TD SECURITIES, NEW YORK:

“It was fairly decent, it does suggest upside momentum in the manufacturing sector, which is encouraging because generally the ISM has been a fairly good gauge on the tone of overall economic activity, so we feel encouraged that we could possibly see an acceleration of the pace of growth in Q4, relative to where we were in Q3. More important the forward-looking indicators are quite bullish, new orders are the highest since April, so as a gauge of future activity it suggest we could see an acceleration in the momentum that we’ve seen in the last few months in the manufacturing sector and the economy more generally.”

PAUL RADEKE, VICE PRESIDENT AT THE MINNEAPOLIS-BASED KDV WEALTH MANAGEMENT

“This could have some impact, but in general better-than-expected data has been trumped by news from Europe and investors digesting the liquidity plan that was announced yesterday. We’re expecting a pullback from our recent climb.”

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:

”It was a stronger than expected reading. It is seeing some gradual improvement but at a moderate pace. New orders were very strong so that should keep some momentum going.

“It is good to see things are not getting worse now although the improvement does look to be moderate.”

JOSEPH LAVORGNA, MANAGING DIRECTOR AND CHIEF U.S. ECONOMIST, DEUTSCHE BANK SECURITIES, NEW YORK:

”The ISM looks similar to the Chicago purchasing managers index. Orders and production were up. Employment was reasonably high. The inventory build this quarter should sustain 3 percent current quarter GDP and maybe better. Equities are up slightly and that’s to be expected with the numbers being a little bit better than where the consensus forecast had them.

“The U.S. economy has weathered the (European) sovereign debt crisis reasonably well until this point.”

TOM PORCELLI, CHIEF US ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

”It was certainly a decent outcome. The internals suggest that manufacturing activity should remain at a fairly modest level and I think that’s probably the best you could say about this report. You’re not falling off a cliff but you’re not gaining much momentum either.

”It’s better than the alternative that most people were talking about even just a few weeks ago when there was talk of a recession and things were falling off a cliff.

“We’re holding above break-even.”

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