ISM factory index confirms U.S. economy shaking-off soft patch shackles

The ISM manufacturing index was 53.5 in June. This matches the high for the year and indicates that the drag on factories coming from the strong U.S. dollar and weak oil industry is no longer having as much negative impact as before, the nadir appears to have been during March-April. 

Gaining consumer and housing sectors are also now lending a helping hand.

The ISM employment component was 55.5 (the highest since December), adding to the upside risk to tomorrow's payroll report. The latter risk was also boosted by the stronger-than-expected ADP employment report. 

It came in at 237k for private payrolls. Construction spending in May was also stronger than expected, up 0.8%. On balance, today's data adds to the evidence suggesting the U.S. economy is shaking-off its "soft patch" shackles and keeping the Fed on track to hike rates later year, we get another solid employment report on Thursday. 

"Payroll growth has been forecasted 220k but given the ISM and ADP readings there is net upside risk to this", says BMO Economics.