The chart below shows the average survey results for the Philadelphia (P), Dallas (D) and Richmond (R) Fed regional surveys compared with the national ISM manufacturing survey. Good correlation, and it suggests that the upcoming ISM numbers (next week) will be bad. So the question is, is this because the mild weather early this year brought forward activity, especially construction (you can't pour concrete below freezing point) which raised activity levels in Q1 and so reduced them in Q2. Now if the strength in Q1 and the weakness in Q2 wasn't due to "payback", then the Dallas Fed's survey should not show payback in Q2, because Texas doesn't get cold enough to stop construction. And it didn't.
So am I reading too much into this? Maybe. And in any case, in the short-term the market will likely respond negatively to a weak ISM. But if I'm right, growth will resume in Q3. Which is more or less what the forward-looking components of these surveys suggest.
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