When all you read is gloom, turn here for a much different perspective.

Wednesday, July 1, 2009

US Economy Grows for Second Consecutive Month

Wednesday the Institute for Supply Managment published its manufacturing report for June 2009. It's overall index (PMI) bumped up for the sixth straight month and stood at 44.8%. The reading suggests, "the overall economy grew for the second consecutive month" in June.

The reading also shows the overall manufacturing sector still on track for a return to growth in the fourth quarter of this year.

Norbert J. Ore, chair of ISM's Survey Committee was quoted as saying "Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June. Most encouraging is the gain in the Production Index, which is up 12.1 percentage points in the last two months to 52.5 percent. Aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries."

The overall manufacturing trend continues to collorate well with the several manufacturing graphs we've published and tracked earlier in the year.

With the June ISM index we have yet another concrete indictor that recovery has begun for this cycle.


  1. GNE,

    Do you agree with some that the job loss report today suggests that the recovery is going to take a lot longer and will be pretty weak when it comes?

  2. No, I don't agree. In fact the ISM index suggests just the opposite. If I further extend the chart trend lines using the PMI, manufacturing also is likely to begin growing again late this quarter. Prior to this month's PMI report, the trend line was looking more like Q4 for manufacturing to begin to growing again.

    This quarter we will probably begin to see a significant drop in new claims for unemployment. I would not be surprised to see the total unemployment rate peak in July at 9.5 or 9.6 and begin to fall in August. By Oct the better employment trends will be non-disputable.


  3. GNE,

    I hope your analysis is correct, but it seems everytime we get a few days of good news, the economy comes back with enough bad news to send the mass media back to the doldrums. Thanks for the positive energy.


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