Weekly Market Insights
 ISM Manufacturing Index
June 1, 2010 |
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| The manufacturing sector continued to hit on all cylinders last month according to the Institute for Supply Management’s purchasing managers index, which came in at 59.7. This was just a shade lower than April’s 60.4, the highest level in nearly six years. Index values above 50 indicate that the manufacturing sector is expanding, while values below 50 indicate contraction. The new orders index, one of the nine composite indexes that constitute the PMI, scored a robust 65.7 for a second consecutive month, which is significant because it is a proxy for future production. At the same time, businesses kept inventories lean, suggesting that the strong order flow will be met primarily through production activity and less by dipping into existing inventories. The May index is evidence that domestic manufacturing activity has thus far weathered the turmoil in Europe, though readings over the next few months will provide more conclusive evidence on whether the U.S. economy can continue to expand. Strong manufacturing activity translates into more goods flowing through corporate supply chains, which will generate demand for warehouse/distribution space. Source: Institute for Supply Management, Grubb & Ellis |
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Bob Bach is our Senior Vice President, Chief Economist