Wednesday, 2 May 2012
ISM almost 55 like model
Still it was no surprise at all according to the little model I use since some time to get an impression where the ISM is headed. It is based on the lagged output gap measured with the capacity utilisation numbers (a big output gap normally causes the ISM to go up), the lagged decline of intial claims for unemployment (a decline is good, it signals more income and final demand ahead) and the lagged rise of the retail sales (this helps the ISM, especially when people buy things).
The model points to an ISM that will remain close to the level of past month. Further away the ISM could go a bit down because the intial claims are rising.