Yes the recovery from the Bush recession has been sluggish, but this was a much more severe recession than we have experienced since the Great Depression. In fact, some have argued that the Great Recession would more properly be called the Little Depression.
The Institute for Supply Management (ISM) has just released its purchasing managers index (PMI) for the month of July showing a gain of 1.8 points, up to 57.1 percent from the previous month’s 55.3 percent. Bloomberg had predicted a more modest rise to 56 percent, but the most impressive fact is that this is the best manufacturing indicator since April of 2011.
Paul Dales, Senior U.S. Economist at Capital Economics, reports,
“At face value, the headline index is consistent with annualized GDP growth of almost 3.5% in the third quarter. That’s pretty much in line with our expectations and is consistent with other evidence that domestic demand is strengthening.”
The ISM report is in line with those from Empire State and Philly Fed with all three reports showing that manufacturing is making a comeback in the U.S. although it is still a modest one.
While construction remains flat, the manufacturing sector added 28,000 new jobs in July in addition to the 23,000 added in June a jump from an index of 52.8 in June to 58.2 in July.
Another promising factor is an increase in the index for new orders which went from 58.9 in June to 63.4 in July as the production index rose from 60.0 to 61.2.
The ISM is scheduled to release its report on activity in the service sector next Tuesday.