Mainstream Media Misses the Boat (Again) on Manufacturing Report
Karl Denninger submits: From the January 2011 Manufacturing ISM Report On Business: The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The manufacturing sector grew at a faster rate in January as the PMI registered 60.8 percent, which is its highest level since May 2004 when the index registered 61.4 percent. The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals." Uh huh. Global demand, eh? What about profits? Input prices recorded at 81.5%, up nine full points since last month. Growth? Okay. But growth in what? Input prices can only go two places: Final prices go to consumers or they get eaten by the manufacturer. Unless you can show me actual private wage growth (not government teat spending) then you're headed for either a demand collapse, profit collapse or both. This is mathematics. I know everyone wants to "make hay while the sun shines," but the fact remains that what's happening here is not sustainable and the media is still cranking out noise about "small business borrowing surges" and similar lines of balderdash. With what will they collateralize their borrowing when the asset base for that borrowing -- their homes -- contracted by $7 trillion,Complete Story »
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