the ISM report shows that the United States manufacturing continues to show a solid performance. “Although the ISM Manufacturing index fell modestly, the sector is still in much better shape than earlier in the year and provides further evidence that domestic economic factors are supportive of a rate hike early next year.” “The latest ISM Manufacturing Index came in a touch lower expected at 52.6 (vs 53.0 in June), driven mainly by a large fall in the “supplier deliveries” component. Crucially, the new orders component (which is useful gauge of future activity) continues to perform strongly and the rise from 48.0 at the end of 2015 to 56.9 now emphasises the solid recovery that the sector has made over the last few months.” “Having been in contractionary territory earlier in the year, the manufacturing sector now appears to be on a much stronger footing.” “Over the next few months, we may see a modest decline in sentiment ahead of the US election, as firms respond to uncertainty surrounding the outcome. Last week’s FOMC statement indicated that policymakers will be watching this, alongside political developments in Europe, closely over coming months.” “However, if there is limited economic overspill from these “global economic and financial developments”, we think the domestic economic story is strong enough to support a rate hike in early 2017.”