The Survey Said!

Sept. 5, 2012
Internal trend characteristics and external leading indicators portend more rise in the US manufacturing sector.

The ISM’s survey of national factory activity slipped in August. The report stated that manufacturing in the U.S. fell by the sharpest rate since 2009, a chilling year to bring to mind. The Reuters' headline stated that this was the third straight month of manufacturing decline in the U.S. 

First, let me state that I am a fan of the ISM and of the Purchasing Managers Index. It is a useful leading indicator when taken in aggregate. The August result of 49.6 does not signal a recession, only a slowing in the rate of recovery. 

More important is the reality that manufacturing in the US has not declined for three months in a row. The Total Manufacturing Production Index, published by the Federal Reserve Board, moved higher at a steeper-than-average pace in both June and July. The August figure is not available yet. The difference between these facts and the headlines is that the Fed deals with actual results while the ISM is based on a survey. Surveys are often useful, but in this case, it seems to be misrepresenting reality. 

The U.S. manufacturing sector through July has risen 20.3% off the June 2009 low. That makes this rising trend steeper than both the 1991-2000 and the 2001-2007 events (at 15.2% and 9.6%, respectively). Internal trend characteristics and external leading indicators portend more rise in the manufacturing sector. Don’t let the headlines scare you into a recession.  

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. 

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.

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