Manufacturing Sector Punches Through to Positive Territory

By September 1, 2009Economy, General

The Institute for Supply Management reported today that the closely-watched PMI manufacturing Index surpassed the breakeven point of 50 and increased to 52.9 in August from 48.9 in July, the highest level since June 2007.

This better-than-expected report shows that the manufacturing sector is in the very early stage of recovery.  While one month does not make a trend, the prospects for the manufacturing sector have improved given that the upturn in August was driven by new orders as well as by new export orders, which will lead to increased production in future months.

The U.S. economy has been though the longest and deepest downturn since the Great Depression, with historic downturns in consumer spending, housing, business investment and exports.  When the economy is running on all cylindersmost likely not beginning until mid-year 2010 the manufacturing recovery will be stronger than the upturns following the last two recessions with significant job growth. 

It will take some time, but this will not be a “jobless recovery” for manufacturing.  More on that in the NAM’s Labor Day Report out later this week.    



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