June ISM: Not Bad, But Post-Holiday ...

by: Karl Denninger


The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The PMI registered 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month ..."

That was better than expectations, and good for an immediate ramp job in the market into horribly bad liquidity (pre-holiday). The violence of the move was not unexpected, given the terrible volume today, however.

Are there any "buts" in the report? Yes. While new orders and production remained over the critical "50" line, inventories are now growing, implying that shipments are exceeding sell-through, and that was a big move. In addition, order backlog is now below 50.

The report was good, but watch that backlog and inventory number. For the day this puts a nice capper on the holiday week; the question now is whether sobriety returns following the fireworks on the 4th -- as earnings are going to start showing up in earnest beginning on the 11th with Alcoa (NYSE:AA).