US ISM points to improvement in manufacturing - Wells Fargo

According to analysts from Wells Fargo, the broad-based improvement in the ISM and most of the subcomponents is consistent with a gradual firming in other measures of manufacturing. They see jobs weakness as a possible reflection of trouble finding skilled workers. 

Key Quotes: 

“The 53.2 reading from the ISM in November ties the fastest pace of expansion for this barometer of the manufacturing sector over the past year and a half. At various points in the current cycle there have been times when the ISM and other surveys were firmly in expansion territory even as other hard measures of manufacturing activity were weak. There are still some mixed signals, but on balance the economic indicators for the manufacturing sector are improving.”

“When we look at just the manufacturing sector, production has increased in four of the past five months. The production component of today’s ISM report rose 1.4 points to 56.0, which is the highest level for this component since January 2015 and augurs well for continued improvement in output at the nation’s factories where capacity utilization has picked up from a five-year low of 74.8 percent in March to 75.3 percent in October.”

“In our discussions with manufacturing companies around the country, the common refrain we hear regarding labor is that good help is hard to find these days. You hear that more from builders but outside of construction, there has been faster growth in job openings for manufacturing than any other industry.”