2021 Midyear Outlook: Navigating through the recovery
Listen in as we discuss our outlook on the US recovery and the Federal Reserve’s new framework, including its impact on inflation, interest rates and growth.
While we continue to emphasize a snapback in the services sector as the driving force in our above-consensus U.S. GDP growth estimate of 7.1% in 2021, we can’t overlook what’s going on in the manufacturing sector.
The new orders component of the ISM Manufacturing Survey hit 68 in March, an 18-year high. The customer inventory index stands at 29.9, the lowest it has been since the survey component was introduced in 1997. And the trend has been decreasing since April 2020, when the index measured 48.8. We see a major inventory rebuild through 2022.
Source: Institute for Supply Management, Bloomberg, Ivy Investments. Dates shown are January 2004 through March, 2021. The ISM Manufacturing index is an economic index based on surveys of firms’ purchasing and supply executives. Index readings above 50 suggests expansion in business activity, while index readings below 50 suggests contraction in business activity. This chart is being provided as a general source of information for education purposes only, and is not intended as a recommendation to purchase, sell or hold any specific security or to engage in any investment strategy.