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Manufacturing continues to be very strong

The ISM indices continues to reflect very healthy conditions in the manufacturing sector, with the April reading exceeding already-high expectations. The chart above suggests that with manufacturing this strong, the economy should be growing at a 5-6% annualized rate, much higher than the meager growth numbers we have seen in recent quarters. At the very least I think this suggests that economic growth should be accelerating over the course of this year.

Export orders have been volatile of late, but continue to reflect fairly robust conditions.

A clear majority of purchasing managers continue to report paying higher prices, which is not surprising given the rise in commodity and energy prices. This is bad to the degree that higher prices are being driven by accommodative monetary policy, but good to the degree that higher prices reflect generally strong global demand.

The employment index continues to run at very high levels, higher than anything we've seen since 1972.

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