ISM Factory Index Signals Continued Expansion
June 1 (Bloomberg) -- "Manufacturing in the U.S. expanded in May for a 10th month as factories continued to help propel the economic recovery. The Institute for Supply Management’s manufacturing gauge fell to 59.7, higher than forecast, from 60.4 in April, which was the highest level in almost six years. Readings greater than 50 point to expansion(see chart above)."
MP: The last time of ten consecutive monthly readings above 50 (indicating expansion) was the ten month period immediately preceding the last recession from February to November 2007. The ISM index has been above a level of 55 in each month this year (January to May), which is the first time since 2004 of five consecutive months that the ISM Index has been above 55.
3 Comments:
worth noting:
the last recession saw ISM trough at about 41. it then rallied to about 62.
this time we bottomed at 33 and have still not reached even the growth rate from the last recovery. this is not to say that we can't, merely that we haven't yet.
so, last time we went to 9 points below flat then rallied to 12 points above (though certainly not in a straight line). this time we dropped 17 points below flat (nearly twice as deep) and have rallied to about 10 above (so far). there has clearly been a great deal more stimulus and looser money this time.
i don't have the data to do an area under the curve analysis to see how we are doing in terms of of total loss in output over the 2 recessions and then how much of it we have made up per unit time in each recovery, but i think that would be a really interesting thing to look at.
keep in mind that manufacturing is < 20% of the US economy however.
From the ISM Report:
Inventories are contracting.
Employment is growing (finally).
Export orders are up.
Import orders are down.
This can't be discrete but instead has to be the trend for the next decade to restore economic balance.
What a whacky index. We're near the highest point of that last 12 years?
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