With many leading indicators showing global slowdown recently, all eyes are now on the next U.S. Economic data.

So far, the U.S. ISM Manufacturing has been holding very well, at historical high levels.

Nonetheless, surveys of business conditions from regional Fed recorded big drop in December.

Looking at the historical correlations between those regional Fed surveys and the U.S. ISM Manufacturing, question is: will the ISM Manufacturing follow?

  1. ISM Manufacturing vs Average (Empire + Philadelphia)

90% Correlation – calling for sub 55.

  1. ISM Manufacturing vs Dallas Fed

85% correlation – calling for low 50’s

  1. ISM Manufacturing vs Richmond Fed

80% correlation – calling <50.

Consensus stands at 57.9 for December.

Again, ISM Manufacturing has been one of the last leading indicator to hold.

Will this leading indicator follow other leading indicators’ recent drop?

I hope it helps,
Gregoire

 

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