The U.S. economic profile for August is still largely a mystery, but today's update on the ISM Manufacturing Index offers an early clue for thinking that last month will remain firmly in the growth camp. The composite value for this widely followed benchmark inched higher last month to 55.7, the highest in more than two years. Although the gain surprised many analysts, my econometric modeling left room for thinking that we could see another decent report, as last week's ISM preview noted. Surprising or not, today's ISM news implies that the upbeat macro trend in July will roll on in August once all the numbers are published.
While the composite ISM manufacturing index increased to a two-year high last month, the new orders slice of the data surged even more. That's a sign for expecting that relatively robust manufacturing activity will persist in the months ahead.
But as the chart above also shows, the employment sub-index slipped a bit. Although the employment reading is still well above the neutral 50 mark, today's ISM report reminds that the outlook is still muted for expecting anything more than a moderate gain in the rate of increase for U.S. payrolls. Then again, if the surge in the new orders sub-index is a guide, perhaps we'll see positive surprises in job creation down the road.