The December 2009 ISM Manufacturing Report is out and PMI came in at 55.9%. This is the highest since April, 2006. New orders are at 65.2%, a huge increase, 5.2%, from last month. Employment is positive, at 52%. Take note, imports increased faster than exports, which for overall GDP is not a good thing. Right now the difference is 0.5% but the percentage difference in growth is 2.0% and exports declined -1.5% from last month. ISM has a given a rough correlation of PMI to GDP:
A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the eighth consecutive month in the overall economy, as well as expansion in the manufacturing sector for the fifth consecutive month.
Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (46.3 percent) corresponds to a 1.6 percent increase in real gross domestic product (GDP). However, if the PMI for December (55.9 percent) is annualized, it corresponds to a 4.6 percent increase in real GDP annually."
| MANUFACTURING AT A GLANCE DECEMBER 2009 | ||||||
|---|---|---|---|---|---|---|
|
Index |
Series Index Dec. |
Series Index Nov. |
% Pt. Chg |
Direction |
Rate of Change |
Trend (Mon.) |
| PMI | 55.9 | 53.6 | +2.3 | Growing | Faster | 5 |
| New Orders | 65.5 | 60.3 | +5.2 | Growing | Faster | 6 |
| Production | 61.8 | 59.9 | +1.9 | Growing | Faster | 7 |
| Employment | 52.0 | 50.8 | +1.2 | Growing | Faster | 3 |
| Supplier Deliveries |
56.6 | 55.7 | +0.9 | Slowing | Faster | 7 |
| Inventories | 43.4 | 41.3 | +2.1 | Contracting | Slower | 44 |
| Customers' Inventories |
35.0 | 37.0 | -2.0 | Too Low | Faster | 9 |
| Prices | 61.5 | 55.0 | +6.5 | Increasing | Faster | 6 |
| Order Backlog | 50.0 | 52.0 | -2.0 | Unchanged | From Growing | 1 |
| Exports | 54.5 | 56.0 | -1.5 | Growing | Slower | 6 |
| Imports | 55.0 | 51.5 | +3.5 | Growing | Faster | 4 |
| OVERALL ECONOMY | Growing | Faster | 8 | |||
| Manufacturing Sector | Growing | Faster | 5 | |||
The manufacturing sector, it appears, is not quite dead but bear in mind it is only 12% of the overall economy.
This is some news worth cheering about regardless.
But the largest percentage increase was prices
and beware of inventory blips (via Prof. Krugman). Just saying.
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RebelCapitalist.com - Financial Information for the Rest of Us.
prices
implies there is some inflation in raw materials for manufacture. That's not surprising to me because we had a major deflationary recession in 2009 as global trade collapsed.
I still wouldn't get one's panties all in a bunch thinking this is all happy talk, it's not. It just shows some good news for manufacturing, but last month's non-manufacturing ISM was contracting and that's the majority of the economy.
Krugman's 1937 op-ed is a damn good one to point out that one can have "good news blips" on the screen that "do not a trend make". I believe "trends" vs. absolutes as well as the time period of a "trend" is pretty much the reason we "diverged" from "other economics bloggers" (who shall remain nameless but I think you know who I'm referring to)
At least for me, that's the divergence. So, while this is great news, it doesn't mean Krugman's warnings and data are not valid or the prediction of a 40% chance of a double-dip.
I think all of this is possible, esp. because so much bad stuff was simply "kicked down the road" and the overall structural problems with the economy.
Also, did you notice the "global recovery" is lead by China and India, with their "manufacturing" being #1? This makes me sick for I see what has happened is the United States simply transferred our jobs, our manufacturing, our services to these countries and now it's being used against the United States and it's economic future. It's not "raising all boats" it's simply sinking ours and giving it to theirs.