By: Dr. Mike Campbell
Hot on the heels of what was widely regarded as a lacklustre Q1 performance which provided evidence that the US economy was slowing, April’s manufacturing data has restored a sense of optimism which pushed the Dow Jones Industrial Average up to its highest closing value for four year.
The index of manufacturing activity, which is compiled by the Institute for Supply Management (ISM) climbed from a March value of 53.4 to 54.8 last month. A value above 50 implies that the sector is in expansion whilst a figure below the 50 mark denotes contraction. According to the ISM report, new orders, production and employment within the manufacturing sector all trended higher in April. The data is seen as encouraging ahead of the release of Labor Department figures on the US unemployment situation which are due out at the end of the week. Indeed, the ISM report shows that employment within the sector was at a nine-month high in April.
Economic indicators around the world have been mixed so far this year with the expected downturn predicted at the end of last year failing to live up to the gloomy predictions made for it at the end of 2011.
The Dow was buoyed by the ISM data and closed at a four year high of 13279. This level has not been seen since early in 2009. To show just how far things have come, at the nadir of the recession, the Dow stood at just under the 7000 point mark.