Manufacturing & The Economy
Manufacturing expanded in August as the PMI registered 59%, an increase of 1.9% when compared to July's reading of 57.1%. August's PMI reading of 59% is the highest reading since March 2011 when the PMI registered 59.1%. 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 43.2%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August PMI indicates growth for the 63rd consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 15th consecutive month. ISM Chair Bradley Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (55%) corresponds to a 3.9% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for August (59%) is annualized, it corresponds to a 5.2% increase in real GDP annually."