07262016Tue
Last updateMon, 25 Jul 2016 3pm

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Manufacturing & The Economy

ISM: Manufacturing Growth at 20-Month High

Manufacturing expanded in February as the PMI registered 54.2%, an increase of 1.1% when compared to January's reading of 53.1%. This month's reading reflects the highest PMI since June 2011, when the index registered 55.8%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI in excess of 42.2%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI indicates growth for the 45th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the third consecutive month. The past relationship between the PMI and the overall economy indicates that the average PMI for January and February (53.7%) corresponds to a 3.6% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for February (54.2%) is annualized, it corresponds to a 3.7% increase in real GDP annually.

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