After a lull earlier this summer, activity in the manufacturing sector is picking up. Factory output rebounded 0.5% at the national level in October. What’s more, some regional surveys suggest a pick up in momentum. The just-released Philly Fed survey was particularly strong on the back of a 21.5 point jump in overall activity in November. This two-standard deviation move was backed by strong rebounds recorded in key components such as new orders, employment, employee workweek, and shipments.

Having said this, it is important to keep in mind that the Philly regional survey has been very volatile in recent months. As such, the current rebound must be kept in perspective. As today’s Hot Chart shows, the Philly survey is finally back in synch with the national ISM index after a few months of decoupling. We do not wish to fall in the same trap that led some pundits to call the direction of economic activity earlier this summer based on the Philly Fed survey alone. Our view is that U.S. factory output continues to expand at the national level, but not at an accelerating rate.



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