U.S.: Now Some Good News!

Apr. 02, 2019 4:15 AM ET3 Likes


  • ISM rises from two-year lows.
  • Construction surges higher.
  • The Federal Reserve remains patient.

After a torrid run, the US has produced some positive news on growth with the ISM manufacturing bouncing back up from two-year lows and construction spending surging higher at the beginning of 2019

By James Knightley, ING Chief International Economist

ISM rises from two-year lows

The March ISM manufacturing index has risen from two-year lows to stand at 55.3 versus the consensus of 54.5. Given 50 is the break-even level, this is consistent with healthy activity in the manufacturing sector with the details showing decent improvements in production and new orders. Meanwhile, the employment gauge jumped five points to 57.5, which hopefully is a very positive sign for Friday’s US employment report. Customer inventories also continue to be run down, which bodes well for continued growth in new orders in the coming months. Another encouraging aspect of the report is the breadth of improvement. Sixteen out of 18 manufacturing sectors are reporting growth with 14 seeing rising new orders and 13 seeing rising employment.

US construction spending to make major 1Q growth contribution (3-month annualised growth)

Construction surges higher

Separately, the construction sector has started the year in a very strong position. After having seen output rise 2.5%MoM in January (initially reported as +1.3%), it rose a further 1%MoM in February versus expectations of a 0.2% fall. Residential construction has now seen three consecutive months of strong growth after having had a torrid 2018 while non-residential construction is currently rising 4.8%YoY.

The Federal Reserve remains patient

The rather volatile nature of recent US economic data reports fully justifies the Federal Reserve’s “patient” stance towards monetary policy. Our position remains that while the economy does face more headwinds this year, there are reasons for optimism, most notably the strong household fundamentals.

If we can also get a positive resolution to the ongoing trade talks, this could remove a considerable amount of uncertainty and give businesses the confidence to put more money to work. While we think the Fed is unlikely to hike rates again, we don't expect to see any interest rate cuts this year.

Content Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

This article was written by

From Trump to trade, FX to Brexit, ING’s global economists have it covered. Go to ING.com/THINK to stay a step ahead. We’re sorry we can’t reply to individuals' comments.Content disclaimer: The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.This publication has been prepared by ING solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. For our full disclaimer please click here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You


To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.