INDICATOR: November Supply Managers' Manufacturing Survey

KEY DATA: ISM: 58.7 (-0.3 point); New Orders: up 0.2 point; Employment: -0.6 point

IN A NUTSHELL: "Manufacturing continues at a robust pace and with orders soaring, it is likely that conditions will only get better."

WHAT IT MEANS: If manufacturing activity is an indicator of the strength of the economy, then we are in great shape. The Institute for Supply Management's November manufacturing index eased a touch, but it came off of a very high level in October. Indeed, there was a large jump in the October index so you can say that the sector consolidated its gains. The details of the report were really good, even if some of the components inched downward. Best of all was the gain in orders, which is at a level that has rarely been seen. Since February 2004, there was only one month, this past August, when it was higher. In addition, both export and import orders increased faster. It is great, but surprising to see that the U.S. continues to be so competitive in the world economy despite the rise in the dollar. Production remains strong, though it expanded at a slightly less robust pace. Hiring continued to be solid and that bodes well for the November jobs report that will be out on Friday. With orders rising, output growing, delivery speed slowing and backlogs building, there is every reason to believe that the manufacturing sector will accelerate.

MARKETS AND FED POLICY IMPLICATIONS: The world economy may be faltering but that is not stopping the U.S. economy from improving. Clearly, domestic activity is leading the way, but with export demand for manufactured products strong, it looks like U.S. companies now know how to defend and expand their markets around the world. The initial Black Friday sales numbers are not pointing to a robust shopping season, but they may be misleading. Retailers are shifting their attention to online sales and Black Friday now lasts anywhere from one to two weeks. Consumers know that they can get good deals for the products they actually want, not what the retailers want to sell them, by simply waiting and surfing the web. Indeed, online demand over the weekend was robust and we are just starting Cyber Monday - which is also likely to last a lot longer than one day as many big chains have cyber week sales. And we don't have a good handle on Small Business Saturday. In other words, there are so many ways to save now - and little reason to put up with the crowds - that the best thing is to simply wait and see what the totals are once we not only clear December, but January as well. That is when the gift card and clearance sales really kick in. Regardless, investors should like the manufacturing data even if they worry about the retail sales numbers. As for the Fed, the members will likely be waiting for the November employment report to see if the labor market has tightened enough to cause wage gains to start to pick up. Once they do, then the supporting data, such as the Supply Managers' numbers, will provide the cover to begin publicly discussing raising rates.