Recent development
March's ISM figure showed a modest increase to 48.6 from 48.3 in February. The rise was mainly driven by increases in supplier deliveries and employment. The new orders index dropped to its lowest level since 2001.
In April, all the regional surveys, except Philly, showed increases in the inventories, and all regions, except Kansas, showed decreases in employment. In summary, Kansas has shown a large increase, whereas Philly and Richmond have shown signs of weakness, compared to last month. The local indices signal an increase in the ISM to 49.8. But as we have mentioned before, the local surveys often tend to lag the national ISM. Today, we expect an ISM reading of 47.5, which is below the consensus forecast of 48.0, but hig
her than our onemonth model's forecast. When looking three months ahead, we expect that the ISM will decline to a level around 45 due to weak demand from the consumers and businesses. However, during the autumn, we expect that the positive effect from the tax rebate will begin to feed into the industry