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Friday, May 1, 2009

ISM Data Signals Return to Growth is Near

Since December you have read here that a return to growth by Independence Day 2009 was likely.

The March ISM Manufacturing data gave us the first opportunity to start plotting a trend line that supported that July 4 call by Professor Hirschey. For years the ISM has correlated their manufacturing index to overall economic growth. When their index exceeds 43, the overall economy is likely to be growing. When the index is above 50, not only is the overall economy growing but there is likely a return to growth in the manufacturing sector.

Given the ISM report on Friday, the ISM index trend continues to point to growth resuming around fireworks day with the manufacturing sector back on track by the end of the year.


  1. GNE,

    You really hit the mark back in March. However, doesn't the index have to be above 50 for expansion, which would indicate growth more likely in the Fall? By the way, some of your google ads are pretty negative on the economy.

  2. Anonymous,

    No according to the Institute a reading above 43 means likely growth in the total economy. A reading above 50 signals growth in the manufacturing sector.

    Thanks for bringing the negative ads to my attention. I have the ability to filter any I don't like. So if you see any that appear economically negative to you, please send me an email at good.news.econ@gmail.com with the description of the ad and I will filter it.

    Thanks for reading.


  3. Tell me who is going to buy the stuff? Then maybe I'll believe it.

  4. Doesn't inventory decumulation need further progress before production ramps upwards?

    Inventory/sales ratio.


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