Check Out the Huge Split in the U.S. Economy
New York (Aug 5) This week we got two economic data points that tell an important story about the U.S. economy. On Monday, the ISM Manufacturing report dipped from 53.5 to 52.7, a number which came in below expectations. Then on Wednesday we got a blistering ISM Non-Manufacturing report (i.e. services). The index surged from 56.0 to 60.3, which is the highest level in a decade. The divergence highlights an important theme in the U.S. economy. Manufacturing companies have been hurt by the strong dollar, which makes their wares relatively less competitive. Services are less export driven, and therefore less affected by the strong dollar. So there should be no surprise that given the huge rally we've seen in USD, the services sector is crushing manufacturers.