Manufacturing A Recovery
This metric is broad in that is looks at many, many different factors — from actual production, to orders, to employment trends, and many others. It is also ‘high frequency’, which means that rather than the data only being released once a year or once a quarter, it’s released every month and only lags the time period it covers by a few days. So it’s a quick, wide snapshot of things as of just a few days ago.
It’s called the ISM Manufacturing Index, and here’s the definition from Investopedia:
“What is ISM Manufacturing Index?
“ISM Manufacturing Index, which used to be called Purchasing Manager’s Index (PMI), measures manufacturing activity based on a monthly survey, conducted by Institute for Supply Management (ISM), of purchasing managers at more than 300 manufacturing firms.
ISM Manufacturing Index, which used to be called PMI, measures manufacturing activity based on a monthly survey, conducted by ISM, of purchasing managers at more than 300 manufacturing firms.
An index of more than 50 indicates expansion of the manufacturing segment of the economy in comparison with the previous month while a reading of 50 indicates no change and a reading below 50 suggests a contraction of the manufacturing sector.”
Note that anything above a level of 50 is considered expansionary. It just spiked from 43.1 to 52.6, which is the largest increase in almost 40 years. Let’s have no illusions: 52.6 is not exactly a boom (it barely clears the expansionary hurdle set at 50), but in terms of reversal of trend, this is a powerful signal.
Manufacturing is a big slice of overall economic output:
That dovetails nicely with recent reports of big increases in manufacturing employment
Per LinkedIn’s most recent employment tracking data:
“Hiring was also up in manufacturing (+47.8% compared to May), consumer goods (+48.1%) and recreation and travel (+157.1%).”
The job isn’t done. But the U.S. economy is not just building products, it’s beginning to build what looks like the beginnings of a recovery.
U.S. Bureau of Economic Analysis, average annualized global output 2016 – 2019 for the U.S.
“Construction work bounds back,” July 2020, LinkedIn
Originally published on Townhall Finance.
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.
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