Only a dedicated naysayer could focus on the negative side of the Institute for Supply Management's announcement yesterday of its manufacturing index for November. Yes, the index fell to 58.7. But that's from October's three-and-a-half-year high of 59, making it the second highest index in forty months, and a number that still beat industry projections.
Some point to weak Black Friday sales as a threat to manufacturing's ongoing growth. Perhaps that's true, but there's more to the story of shoppers staying home than a decrease in demand for consumer goods (and the manufactured components behind them). The dilution of Black Friday's exclusivity, which now covers the days or weeks before and after the day itself, along with a growing backlash against the propriety of the tradition, may have also contributed to this year's 11% drop.
Black Friday aside, manufacturers aren't wrong to be wary, even in the face of steady growth. A weaker global economy has the U.S. stock market jittery, even with the good news on the domestic manufacturing front. Overall planned equipment spending for October was down, perhaps in an attempt to keep capacity in line with an anticipated drop in global demand thanks to the strong U.S. dollar.
Capacity concerns can go both ways, though, and despite the global slowdown, U.S. exports actually went up in October, according to Reuters and Bloomberg. And a full order pipeline is great, but having to turn down work is not, so the ISM's report that factory demand far exceeds capacity right now may be a reason for manufacturers to think about a more bullish point of view. Sifting through the monthly economic data rarely presents an easy consensus, but "cautious optimism" seems to be a safe outlook for the rest of 2014 and beyond.