12/29/2011
By David Urani, Research Analyst

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Focusing in on to manufacturing, we got the last two of the regional Federal Reserve manufacturing indices for the month today from Chicago and KC. That means we can draw up a picture of what we can expect for the all-important ISM report on Tuesday. Notables for the month include today's KC report, which dropped negative for the first time since December 2009, and was the lowest since August 2009; Empire state, which also fell negative; and Philly and Empire State, which were the highest since this spring. Given the mixed numbers in the various regional reports, and a lack of really big moves, it looks like the current consensus for a slight gain from 52.7 to 53.0 for the ISM is a reasonable estimate.

We would note that the Philly Fed and Empire State indexes, the two strongest, also happened to be the two earliest to come out. Meanwhile the two latest, the KC and Chicago, were weak. Perhaps that means midway through the month manufacturers realized they had enough product ready for the holidays. I wouldn't expect a particularly surprising result either way, but keep an eye out for rising inventory and/or falling new orders for clues on potential overstock.

David Urani
Wall Street Strategies