The Institute for Supply Management’s (ISM) “Purchasing Managers’ Index (PMI)” plunged 3.8 points for June, to a level of 49.7. According to ISM, a PMI below “50” is consistent with a contraction of manufacturing.
Our respondents are still showing strong order books, with many shops only taking off one day for the holiday this week.
While the June PMI of 49.7 shows contraction in manufacturing, it nevertheless is consistent with an increase of real GDP, according to the ISM. About 2.4% as I read the release.
History lesson: This is the first instance of the PMI coming in below 50 since July 2009- the end of the “Great Recession;” it had been on a 34 consecutive month run indicating growth in manufacturing.
Circumstances today around the world make it easy to use this indicator as a sign that bad days are
coming here. Our data and conversations with shops indicate that that would be a great way to miss the opportunities that are available right now.
Why let the talking heads scare you out of today’s opportunity to employ your productive assets and employees?
This is an important indicator, but it does not sound the death knell for our very strong manufacturing business es at this time.
Our business trends report for June will be out in two weeks. We’ll revisit this then.