Ignore the Hysteria- December ISM PMI is a Positive Indicator

Contrary to the negative descriptions of many of the headline writers, the December ISM PMI index came in UP 0.6% from its 5-year average for December from 2013-2017, indicating growth in the Manufacturing sector in December, and in the broader economy.

How bad are those headlines? Sheeeesh!

How about

Bad ISM gives huge push in US T’s back

or :

US Factory Gauge Tumbles by Most Since 2008.

Nothing like calling up the ghost of recessions past. Recession must be imminent, right?

Now before analyzing these incredibly pessimistic headlines, let us state a couple of Facts.

Fact 1) The December 2018  ISM PMI was actually 54.1 and indicated continued economic expansion;

Fact 2) The average December ISM PMI for the five years of 2013-2017 was 53.4;Fact 3) The December 2018 ISM PMI came in actually 0.6 points ABOVE THE FIVE YEAR AVERAGE!

Fact 4) When the ISM PMI fell in September of 2008 to 38.9 in October of 2008, the index was already in negative territory-below 50.

Truth be told, the December 2018 ISM PMI continued to indicate “expansion in the manufacturing sector in December and in the general economy For the 116th consecutive month. ISM

How is that bad news?

While the numeric value of the drop  was the “largest” since 2008- the fact that the index remained in positive economic expansion is ignored in the headline- leaving the reader to ponder the scary connection to the Great Recession of 2008.

The 5-year average for December was 53.4. Why all the weeping and gnashing of teeth?

Here’s my headline- December ISM PMI  index at 54.1 remains solidly positive indicating continued expansion.

Economic expansion in the Manufacturing sector -just above the average for the past five December’s- and the 116th consecutive month of expansion in the broad economy. We see it as good news for the season! We think that you should too!

 

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