I’m certainly not here to be a “Debbie Downer” and in all fairness, there could be some real positives in the latest round of economic data. Before I dive into productivity, however, it wouldn’t be a balanced argument if I didn’t fold in Wednesday’s unexpected jump in the Purchasing Managers’ Index (PMI), which showed a reading of 56.3%. This was a 0.8% increase when compared to July’s reading of 55.5%.
The Institute for Supply Management’s (ISM) latest PMI figure was a testament not only to manufacturing growth in August, but continued growth for the 16th consecutive month in the overall economy. (A PMI reading in excess of 42%, over a period of time, generally indicates an expansion of the overall economy). The reading also indicated expansion in the manufacturing sector for the 13th consecutive month. A reading higher than 50% indicates that the manufacturing sector is generally expanding; below 50% suggests contraction.
Eleven of the 18 manufacturing industries enjoyed a positive growth month in August. Here is the list of industries, in order of growth rate:
- Primary Metals
- Apparel
- Leather & Allied Products
- Transportation Equipment
- Fabricated Metal Products
- Electrical Equipment
- Appliances & Components
- Miscellaneous Manufacturing
- Computer & Electronic Products
- Paper Products; Chemical Products
- Food, Beverage & Tobacco Products
- Printing & Related Support Activities (more…)
One of my favorite things to do is observe and sometimes laugh as market pundits (and sometimes that includes me) attempt to explain the reasons why the market does what it does. I woke up Thursday morning to S&P futures again moving higher by seven points and 10-year note yields above 3%. Lo and behold, the same folks who were calling for near-Armageddon last week now seem to think all is good in the world. The headlines read, “Unemployment Claims Drop More Than Expected … Market Looking Strong.” But is it … really?
