The Institute for Supply Management’s Manufacturing Report that came out Friday came in at 55.0, up from April’s 54.7. Any reading about 50 indicates expansion. With the exception of two months with readings between 49 and 50 (Nov. 2006 and Jan. 2007), the index has been above 50 for the last 48 months.
The Non-Manufacturing Report on Business, which covers the 86% of the economy other than manufacturing, was just released at 10 AM today. It came in with a reading of 59.7, zipping upwards nicely from 56 the previous month, and thumping a Bloomberg forecast by 72 economists of 55.8 (in fact, the result was outside the 53.0-58.5 range of all of the individual predictions). This report has come in showing and above-50 reading of expansion for the past 50 consecutive months.
In sum: 14% of the economy is doing just fine, and 86% of the economy is seriously rocking.
Worth asking, not answerable: Third- and fourth-quarter GDP growth was hampered by inventory reductions, yet overall production per the ISM reports has continued to expand. Once producers have reduced inventories all they conceivably can, aren’t they going to have to ramp up production even more during the second quarter to keep up with steady demand?
Here’s a clue that the answer is “yes”: The May report shows that the Inventories element of the Non-Manufacturing Index shot up from 52 in April to 61, along with an indication that Inventories are “Growing Faster.”