Weakest Growth Doesn’t Mean Weak Manufacturing

The latest Institute for Supply Management Index for Manufacturing  activity fell to 50.9 in July from 55.3 percent in June. The July reading was the lowest since the end of the recession in June 2009.

Not so fast...

The important fact to know about the ISM numbers is that they indicate growth or contraction in manufacturing. For the past 23 months the index has shown that manufacturing has been expanding.

23 straight months of manufacturing expansion!

 So the July 2011 data  of 50.9 indicate that – guess what- manufacturing is still expanding, but just barely so. Why would we expect this to go on forever and ever?

After 23 straight months of expansion, a slow down in that expansion is hardly a sky is falling moment.

The PMPA’s Business Trends Sales Index is at its highest level at 131- with year 2008 as base year of 100.

Our latest data is strongly ‘remains the same’  or ‘positive’  so far.

So if you are one of the people wringing your hands over the <gasp> fact that after 23 straight months of expansion, the rate of growth and expansion in manufacturing might be slowing- well, here’s a nice cup of camomile tea.

Relax...

There will be a blue sky up above you next month folks. One data point out of 23 is not reason to go to Defcon 1.

See you next month...

ISM Graph

The Scream

Defcon 1

Tea

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One Response to Weakest Growth Doesn’t Mean Weak Manufacturing

  1. Jon Banquer says:

    Manufacturing has been hit so hard for years that it doesn’t really had much choice other than to go up.

    Just because this guy is not a capitalist doesn’t mean we can’t learn a lot from him because he’s got some excellent points:

    It’s time for people first. How well did putting the automobile first for decades serve the US?

    Jon Banquer
    San Diego, CA
    http://whygibbscamisthewrongchoice.blogspot.com/
    http://whymastercamisthewrongchoice.blogspot.com/

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