"Economic activity in the manufacturing sector expanded in August" for the first time in 18 months according to an ISM report on business. Good news for consumers who have been holding their breath so long their turning blue. PMI, the Purchasing Manager's Index hit 52.9% in August. 50% marks a manufacturing economy at break even. Finally, the economy is actually expanding. New orders are growing 9.6% faster than July and production has improved 4%. However, don't look for an immediate employment turnaround. Typically, employment rises several months after corrections in the PMI. August employment slowed but at a slower rate than July.
Think of manufacturing as a ship making a right turn. We need about five miles to make it happen. More good news includes a shortage of customer inventories and rising exports.
On the non-manufacturing side the market is still contracting at a slower rate indicating course correction in the right direction but still going the wrong way. The NMI (Non-Manufacturing Index) was at 48.4% in August up from 46.4% in July. The brightest spot is new export orders that actually expanded in August with an index of 54%. To read the whole report, go to ism.ws.
