As this data is updated monthly you can access the updated data from the Economic Charts menu in the lower left sidebar. Or just bookmark the permanent page.
ISM New Orders Index Not Seasonally Adjusted
ISM New Orders Index Chart- Click to enlarge
The ISM not seasonally adjusted (in other words, actual) new orders index as of April 2012 has been diverging from the stock market as the growth rate of the US manufacturing sector slows. This suggests that the April factory orders data won’t show much growth when announced next month. The manufacturing sector represents about 11% of the economy. The services sector data representing the bulk of the US economy, normally released a few days after the manufacturing data, typically shadows this index closely.
Real New Factory Orders, The Stock Market, and The Fed
Real Factory Orders, The Stock Market, and The Fed - Click to enlarge
As of March, real factory orders, adjusted for inflation are now flat for the last 12 months. The much ballyhooed manufacturing growth is a media myth. The trend was still up in February as the year to year line for that month shows. But than in March, that line turned flat. February was strong due in part to the warm weather. That robbed orders from March, leaving the trend flat for the last 12 months. Them message from the lower half of the chart is that if the Fed does not step on the gas, both the economy and the stock market are likely to stall out. Whether the Fed pumps or not may depend on whether commodity prices cooperate.
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We may be skating on very thin ice here, but the weight of the evidence still supports a weak bull case for the near to intermediate term. So I’m adding buy picks on the chart pick list and adjusting trailing stops to account for the risk.
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These reports are not investment advice. They are for informational purposes, for a broad audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance.
