While the American manufacturing industry got off to a good start this year, it has since slowed in recent months. This led some market analysts to speculate that a recession was on the horizon. Of course, views such as this are all-too-common anytime there’s a decline. However, I think it’s safe to say the American manufacturing industry is back to its normal, healthy working order, as a recent report revealed the industry rebounded in September.
According to a report published by the Institute of Supply Management (ISM), the American manufacturing industry saw strong gains throughout the month of September. The ISM had previously rated the industry a 49.4 Purchasing Manager’s Index (PMI) in August, signaling a downwards trend for the industry. Fast forward just one month, however, and the ISM gave the American manufacturing industry a 51.5 PMI.
So, what do these numbers meal exactly? Well, the ISM creates these rating based on a survey of purchasing managers. Manufacturing industry purchasing managers are surveyed at the end of each month, with ISM analysts asking them a series of questions regarding their views on the industry and whether it’s trending up or down. Any PMI above 50 signals positive growth, so this is the baseline on which analysts measure the “health” of the American manufacturing industry.
ISM analysts attribute the industry’s strong gains to an increased number of domestic and international sales, along with increased buying habits among consumers.
The American manufacturing industry hasn’t always seen such positive gains, however. As noted in a separate report by Markit Economics, the industry slowed to a near-stop in recent months. But ask any seasoned market analysts and he or she will likely agree: what comes up must go down, and vise-versa. It was only a matter of time before the American manufacturing industry rebounded, and it appears that time is now. Thanks to its strong month in September, the American manufacturing industry is back on a positive track, which will hopefully continue for many more months and well into the new year.
“The survey saw firms pulling back on expanding production and focusing instead on cost-cutting, as inflows of new business slowed to the weakest seen so far this year,” said Chris Williamson, chief business economist at IHS Markit. “Any growth is largely being driven by the consumer, in turn helped by tail-winds of low interest rates, low inflation and a solid labor market.”