Good News/Bad News?

Chart of the Week for October 1-7, 1999

The National Association of Purchasing Management (NAPM) Composite Index increased to 57.8 in September, beating estimates as new orders, new export orders, and production of manufacturers all increased sharply. This is the highest level of the Index in over two years and could indicate future inflation. The report indicated that manufacturers have increased production to meet the seemingly endless demand by American consumers. This news, just days before the Federal Open Market Committee is set to meet to discuss the future of interest rates, sent bond yields soaring higher on Friday as bond prices fell.

Description: The NAPM Composite Index is a gauge of the strength of the manufacturing sector, and can be used to confirm cyclical changes in economic growth. An index value above 50 indicates expansion in manufacturing; below 50, contraction. A sustained high value may cause some market watchers to be concerned about future inflation.

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