Huzzah! The recovery is here!

At least, that appears to be the upshot of this week's "Purchasing Managers Index," just out from the Institute for Supply Management Monday. With the index now reading 56.9%, American's manufacturing base appears to be firmly entrenched in optimistic territory, feeling happier about how things are going than at any point in at least five months.

And the news just gets better. According to the ISM, the recovery is especially strong "in autos, computers and exports." Grand news for anyone planning to invest in the upcoming General Motors IPO, for those who already own Ford (NYSE: F), and for those risk-revelers who've rolled the dice on an upstart Tesla Motors (Nasdaq: TSLA). For that matter, I suspect Intel (Nasdaq: INTC) shareholders are similarly thrilled, with ISM's data appearing to confirm the bullish sentiments expressed by Macquarie yesterday, and by Intel itself last month.

Digging into the details of Monday's report, we find startling reversals of last month's depressing news:

  • Production rose 6.2 percentage points in comparison to September.
  • Orders for new production exploded skywards -- up 7.8%!
  • And while the erosion of backlogged orders continues, the month-over-month 0.5% drop suggests that this trend's days are equally numbered.

Where do we go from here?
Probably the biggest trend affecting investors, though -- and the most investable for us -- is that of the amazing, shrinking, U.S. dollar. On the one hand, ISM reports cries of despair from commodities consumers: "The dollar is weakening again ... resulting in higher costs for our materials we purchase overseas. It is hurting our profit margins."

On the flip side, though, a weaker dollar makes U.S. goods cheaper for foreign buyers, which has helped drive up exports 6% last month. This suggests a couple of interesting plays for trend-spotting investors. Higher commodity prices spur investment in their mining. Combine that with export strength, and we could see big things for companies like Caterpillar (NYSE: CAT) and Deere (NYSE: DE). Already profitable, they could become more so if the recovery is truly at hand.

At least, that's my read on the PMI report. But maybe you see something different? Take the Foolish Rorschach test. Tell us about it below.

Fool contributor Rich Smith does not own shares of any company named above. Rich is not a licensed economist, but he plays one on the Web. Check out his latest stock recommendations on Motley Fool CAPS. The Motley Fool has a disclosure policy.

Intel is a Motley Fool Inside Value recommendation. Ford Motor is a Motley Fool Stock Advisor pick. The Fool has established a bear put spread position on Caterpillar. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Intel.

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