January 15, 2007

Fun Factoid About Manufacturing

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 1:27 pm

Decmber’s rebound of the Institute for Supply Management’s (ISM) Manufacturing Index (from contraction in November at 49.5 to expansion in December at 51.4; noted as part of this post; any reading over 50.0 is considered expansion) was unprecedented.

Every long period of manufacturing expansion in the past 60 years has been followed by several at least seven months of contraction. But the most recently ended expansion was followed by only one month of contraction before manufacturing moved into expansion mode again, as you’ll see.

The following is from ISM history going all the way back to 1948; parenthetical values are for the month following the end of each streak, the lowest value it went to during the subsequent contraction, and the number of months of sub-50 performance occurred before the Index went back to 50.0 or higher (previous info carried forward from this previous post):

– February 1971 – August 1974: 43 months (46.2, 30.7, 12)
– August 1986 – April 1989: 33 months (49.3, 45.1, 12)
– October 1962 – December 1966: 51 months (49.1, 42.8, 8)
– August 1975 – July 1979: 48 months (49.5, 44.8, 7)
June 2003 – October 2006: 41 months (49.5, 49.5, 1)

Of course, no one can predict whether the expansion will continue, but it’s worth celebrating early indications that, unlike in the past, an extended expansion in the manufacturing sector appears, so far, to no longer automatically indicate that there will be a long period of decline.

Media outlets I have found that have noticed the above: Zero.

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Cross-posted at NewsBusters.org.

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