The ISM manufacturing report was very positive on Tuesday. Backlogs were up, inventories were lower, and supplier deliveries were slower (I think that’s called vacations and forced factory shutdowns). Backlogs and low inventories mean that Q3 may look better than most expect, and will contribute to a strong Q4.

The report also suggested that productivity was still increasing as employment in manufacturing is still on the decline, which also implies low inflation ahead. The ISM claims that its report also implies that the GDP is moving at a 4.3% rate. At that rate, employment would start to show a rebound soon.

By Thursday, confirmation of the ISM report came in the form of an upward revision of second quarter productivity from 5.7% to 6.8%. There was also an increase in first-time jobless claims, as the four-week moving average continues to flirt with 400,000, recognized as an important level. Why that is, I don’t think anyone remembers. Employment costs actually went down, and that’s important because it is a metric that Alan Greenspan watches.

On Thursday, ISM released its non-manufacturing report, still at an all-time high, with new orders reported by “construction, legal services, communication, real estate, retail and wholesale trade.” One of the best ways for printers to use the ISM reports is to give direction to salespeople to look for customer segments that are displaying generic economic growth. The ISM continued “The only industry reporting contraction of new orders… is finance & banking.” This is probably caused by a decreased level of mortgage refinancing as interest rates have begun to creep back up. There was also a big increase in export orders. This non-manufacturing report was very bullish overall. There were, however, complaints about slow deliveries.