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« Weighing the Week Ahead: Understanding the Wall of Worry | Main | ETF Update: The Lure of Brazil »

October 06, 2010

Comments

Andrew

Thanks for the explanation on the ISM! I figured it was a regression analysis, but did not know they provided it themselves.

oldprof

Andrew -- Thanks for the kind words

The ISM has done their own regression analysis using a long data series. The index weightings were changed a few years ago, and they adjusted the relationship a bit. Each month they report the GDP equivalent in the press release. The most recent reading is 4.2% growth. Since manufacturing is in a long-term decline (compared to services) the intercept for a zero growth economy is an ISM reading of about 42. Here is the link for the current report:

http://www.ism.ws/ISMReport/MfgROB.cfm

Thanks for commenting.

Jeff

Andrew

Jeff,

You said regarding ISM Manufacturing, "Most people do not know much about interpreting this index, which is still indicating GDP growth of over 4%." Perhaps you've discussed this in the past and I just missed in during my search.

My question is what is the rule of the thumb for interpretting this?

Do you just run a simple regression of the two data streams?

By the way, this is my favorite financial blog due to the even-keeled approach - Nice work as always!

Thanks!

Online Degree

Great and nice post thank you.

The comments to this entry are closed.