Wednesday, February 1, 2012

Manufacturing Production: Gains Continue

This morning the Institute for Supply Management reported continued growth in its Purchasing Managers' Index:
Here's how the announcement began:

“The PMI registered 54.1 percent, an increase of 1 percentage point from December's seasonally adjusted reading of 53.1 percent, indicating expansion in the manufacturing sector for the 30th consecutive month….”

Let's put that in historical context by examining the chart.

Purchasing Managers' Index

(Click on chart to enlarge)

(Recessions shaded)

Begin by keeping in mind that any number over 50 indicates expansion. As the announcement says, we've had to 2 1/2 years of steady growth. You will notice explosive growth in 2010 as industry restarted production in order to restock depleted inventories. But that has ended. Now we are in a steady upward climb, hoping for continued month-to-month gains.

This is all part of our slow recovery from recession. Expect neither renewed setback or dramatic gains.

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© 2012 Michael B. Lehmann

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