CHART OF THE WEEK
The year started with increasing concerns that the US economy would slide into recession. The fall in the ISM manufacturing index below the 50 threshold was one of the main reasons for these concerns. It is therefore welcome news that the index has passed back through 50 to read 51.8, boosted by a strong upturn in the new orders component that increased to 58, its highest level since November 2014. The Non-Manufacturing ISM rose 1.1 points to 54.5.
Our Analysis
US first quarter economic growth figures may well turn out to be disappointing. However, the rebound in the March ISM indices leaves the door open to an upturn in the second quarter. This scenario would repeat a pattern observed over the past two years when poor first quarters have been followed by sharp upturns.
The opinion expressed above is dated April 8th, 2016 and is liable to change.
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