The slump in manufacturing has created overblown fears of a recession, says RexNutting
Reports of the demise of U.S. manufacturing have been exaggerated, and that may be one reason why fears of an economy-wide recession got out of hand earlier this year.
To be clear, there is no accepted official definition of what constitutes a “recession” in any particular sector, as there is for the broader economy. Generally, a recession is defined as a significant, broad and lasting decline in economic activity, seen in output, incomes, employment and sales. ISM is an outlier There’s one other indicator, however, that puts this slump on a par with the two previous events: The closely followed Institute for Supply Management’s manufacturing index, which has absolutely plunged this year, falling from 60.8 in August 2018 to a 10-year low of 47.8 in September.Readings below 50 indicate that most business executives who were surveyed reported declining activity for their company in production, new orders, employment and other business metrics.
For much of 2017 and 2018, the ISM was signaling much more strength than the hard data, and now it’s signaling much less.
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