Economy Strengthening Says The Lending Circle, Based on December ISM Manufacturing Activity

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The monthly data regarding activity within the U.S. manufacturing sector compiled by the Institute of Supply Management was reported as 50.7 in December, moving the index back into growth territory and off the 2012 low of 49.5 posted in November. The ISM index is created based on the results of a survey of manufacturing supply managers across the U.S., and any reading above 50 indicates the manufacturing sector is growing.

The Lending Circle, a Division of Sunovis Financial

Increased manufacturing orders, increased factory hiring, and the resolution of part of the fiscal cliff all point to increased economic activity and stronger business growth.

The monthly data regarding activity within the U.S. manufacturing sector compiled by the Institute of Supply Management was reported as 50.7 in December, moving the index back into growth territory and off the 2012 low of 49.5 posted in November. The ISM index is created based on the results of a survey of manufacturing supply managers across the U.S., and any reading above 50 indicates the manufacturing sector is growing.

“Increased manufacturing orders, increased factory hiring, and partial resolution of the fiscal cliff all point to increased economic activity and stronger business growth,” said Terry Robinson, President of The Lending Circle. “Of course this excites us because strong business growth leads to increased borrowing needs for capital expansions and the like.”While the return to growth territory is promising, this is just the third time in the past 7 months that the index reading has been above 50.

Adding to the optimism was the news that new manufacturing orders grew for the fourth month in a row, indicating more growth for the sector in 2013.

Additional encouragement came from the ISM employment index, which increased by 4.3 percent in December. This shows that factories continue to hire despite a stagnant economy and uncertainty from so many directions.

This ISM survey is the first report showing how the economy and businesses fared in the closing weeks of 2012. Because data was collected in the third week of December however it probably does not reflect the latest concerns about the fiscal cliff. Negotiations were promising during the survey period, however since then uncertainty has increased, due to the sequester issue as well as the debt ceiling problem within the next two months.

Terry Robinson said, "Throughout December sentiment among CEOs, business owners, investors and consumers reflected concerns over the squabbling in Washington and handling of the fiscal cliff issue. While any tax questions can now be put aside, it is likely that the combination of the sequestration and debt ceiling debates will renew some concern."

"The last several months have been going sideways because of the uncertainty about what's going on," said Mr. Holcomb of the ISM. "It's like children playing nasty in the sandbox. It's just ridiculous and doesn't really lead to confidence."

While business investment looked to be gaining strength in the beginning of 2012, it weakened significantly in June and has yet to recover. Capital spending has been nearly as low as during the recession, and while some areas are recovering there are still many which are struggling.

Construction spending is one such example. Due to a drop in nonresidential construction in November, the Commerce Department has reported a 0.3 percent drop in construction spending, even though the residential construction market continues its recovery.

About The Lending Circle
The Lending Circle, a division of Sunovis Financial, works to address the great pent-up need for financing nationwide, and will help borrowers with their needs whatever they may be. Their broad network of lenders is positioned to provide capital where it can do the most good.

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Kathy Heshelow
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