Tuesday, May 1, 2012

Purchasing Managers’ Index in Perspective

The Lehmann Letter (SM)

This morning’s report from the Institute of Supply Management that its April Purchasing Managers’ Index (PMI) rose slightly to 54.8 is good news:

But once again we turn to our chart for perspective. Any reading over 50 is good because it shows that manufacturing is growing, and you can see that the PMI has been above 50 since the recession. This indicates that manufacturing continues to expand, but not at a robust rate.

Purchasing Managers’ Index
(Click on chart to enlarge)

(Recessions shaded)

The PMI reached toward 60 immediately after recession’s end as businesses restocked their inventories. That jump in orders bumped the PMI upward. Then it settled into a long, slow upward climb of readings just above 50.

Today’s report is good, but not great. And that’s OK. The coming months will reveal whether or not manufacturing has begun to grow more rapidly.

(To be fully informed visit http://www.beyourowneconomist.com/)

© 2012 Michael B. Lehmann

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