The Institute for Supply Management last week reported that “The November PMI® registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. “ This value means that “Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 102nd consecutive month.”
We’d like to provide a wee bit of sensemaking to this report- as normally people would think that a decline in the index is not a positive thing.
- The decline is just 0.5 point- which means that this November reading is higher than every other monthly reading this year except for October and September. Can you say “unseasonably high?”
- That decline is also higher than 45 of the last 50 readings, going back to October 2013. Do you agree with us that the data indicates that “the process has shifted.”
- The absolute values of the index are consistent with Economic activity in the manufacturing sector expanding as well as growth in the overall economy.
Here’s the chart, courtesy of Calculated Risk Blog
We took the liberty of running the ISM PMI averages for January through November for 2014, 2015, 2016- they came in at 55.84, 51.67, 51.22; together, they average 52.91.
The 2017 January-November average for the ISM PMI is 57.38.
We believe that the data is clear that the process has shifted, in a positive direction. Up 4.47 points 98.4%) over the average for the same period for the last three years.
Manufacturing in the United States is performing substantially better than it has over the past three years, and we believe that is is not an anomaly.