US: Expect a modest decline in ISM manufacturing – Nomura

Analysts at Nomura forecast a modest decline in US ISM manufacturing to 59.0 for October, from 61 in September.

Key Quotes

“Much of the sharp increase in the headline index in September was driven by a sharp increase in the suppliers’ delivery index, which showed the sharpest increase since September 2005 following the landfall of Hurricane Katrina.”

“We expect some reversion in this index as disrupted supply chains get restored. Despite a likely pullback, we continue to expect an elevated reading for October considering solid expansion in manufacturing activity in recent months. Note that our forecast of 59.0 would still imply healthy expansion. Data on shipments and new orders or core capital goods (excluding defense equipment and aircraft) have been strong, reflecting elevated momentum. Considering the incoming information, we expect better equipment investment in the near term.”