Tuesday, March 1, 2011

March Is Off To A Strong Start

The Lehmann Letter (SM)

This morning the Institute for Supply Management reported that its Purchasing Managers' Index increased to 61.4% in February from 60.8% in January:


This is a strong sign that manufacturing activity is growing and is a good omen for the overall economy.

Purchasing Managers’ Index

(Click on chart to enlarge.)

Recessions shaded

All readings over 50% indicate expansion. Those under 50% signal contraction. The chart shows that the index has been over 50% for some time. Today's 61.4% report confirms continued robust activity. The index reflects a manufacturing sector that has put recession behind it.

Keep in mind, however, that this letter has also tracked the Federal Reserve's releases on industrial production and capacity utilization. They indicated that industrial activity reached a plateau this winter and has not expanded lately. The Fed releases its March data on the 17th and this letter will examine those numbers to determine whether or not they confirm today's strong report. We can't put all our faith on one statistic.

Nonetheless this is a strong start for the new month.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2011 Michael B. Lehmann

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