ISM Manufacturing Index: Economic Recovery is Real, and Consistent With Real GDP Growth of 5.2%
"Economic activity in the manufacturing sector expanded in October for the 15th consecutive month, and the overall economy grew for the 18th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business":Highlights include:1. The last time the ISM Manufacturing Index (PMI) remained above 50% (signaling expansion) for 15th straight months was back in the 2005-2006 period (see chart above).2. Compared to the 16-months following the 2001 recessiuon, the recovery of the manufacturing sector has been much stronger in the period since June 2009. The ISM Index has been at a level of about 54 or above for the last 12 months, and that marks the strongest 12 month expansion in manufacturing since 2004.3. ISM's New Orders Index registered 58.9 percent in October, which is an increase of 7.8 percentage points compared to the 51.1 percent reported in September. This is the 16th consecutive month of growth in the New Orders Index and the largest month-over-month improvement since January 2009.4. ISM's Employment Index registered 57.7 percent in October, which is 1.2 percentage points higher than the 56.5 percent reported in September. This is the 11th consecutive month of growth in manufacturing employment.5. The past relationship between the ISM's PMI Index and the overall economy indicates that the average PMI for January through October (57.4 percent) corresponds to a 5.2 percent increase in real gross domestic product (GDP). In addition, if the PMI for October (56.9 percent) is annualized, it corresponds to a 5 percent increase in real GDP annually.
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