On the back of disappointing durable goods data for December, market watchers will be paying even more attention to how ISM manufacturing index data fared during February.
The survey by the Institute of Supply Management will give a peek into the overall health of the factory sector in the U.S. Economists polled by Bloomberg are expecting a reading of 56.0 for February, slightly lower from the 56.6 reading from January.
“The ISM manufacturing index rose 2.3 points in January. However, that rebound occurred after the index posted its single-largest monthly drop since December 2008. Underlying details of January’s report and slower domestic and global growth continue to point to factory activity slowing on trend this year,” Wells Fargo wrote in a note on February 22. “We expect the ISM index to give up a bit of ground in February. If the index falls more than we anticipate, it would support the cautious policy stance by the FOMC. A miss to the upside, however, would provide some comfort that activity in the factory sector has held up, at least, through February.”
Credit Suisse expects a slight decline in February’s reading before a bounce back later in the year. “We expect ISM manufacturing to decline to 55.0. Global growth momentum has likely already troughed, but the tradeable goods sector should remain sluggish. We expect ISM manufacturing to remain in the low-to-mid 50s for the next few months before beginning to move higher later in the year,” the firm wrote in a note February 21.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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