Manufacturers Alliance/MAPI Analysis on ISM Index: Manufacturing ‘Neither Booming Nor in Recession’

The following is an analysis from Daniel J.Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, regarding the Institute for Supply Management (ISM) index for September 2011:  

“The Institute of Supply Management (ISM) index of 51.6 for September was an
improvement of 1 percentage point from 50.6 in August.  Two aspects of
this report are positive for the manufacturing sector—the index is above 50
percent, indicating growth, and the overall index increased,” said Daniel J.
Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. 
“Frankly, the ISM index has understated the strength in manufacturing as
measured by the industrial production index in July and August, but now seems
to be catching up with the acceleration in manufacturing activity that occurred
after the Japanese tsunami’s supply chain effects dissipated.

“We believe manufacturing production grew at a 4 percent annual rate in the third
quarter, a pace of growth faster than the less than 2 percent growth expected
in the general economy,” he added.  “Business equipment spending remains
robust in light of strong profits and generous cash reserves.  Consumers
have pent up demand for durable goods after the long recession and lethargic
recovery.  Manufacturing is neither booming nor in a recession.  The
sector is experiencing a subpar recovery from a very deep recession.”