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Productivity Revised Lower, But PMI Growing – Huh?

By September 4, 2010No Comments

Productivity Revised Lower, But PMI Growing – Huh?

by Jared Levy on September 2nd, 2010

Productivity and the PMI I’m certainly not here to be a “Debbie Downer” and in all fairness, there could be some real positives in the latest round of economic data. Before I dive into productivity, however, it wouldn’t be a balanced argument if I didn’t fold in Wednesday’s unexpected jump in the Purchasing Managers’ Index (PMI), which showed a reading of 56.3%. This was a 0.8% increase when compared to July’s reading of 55.5%.

The Institute for Supply Management’s (ISM) latest PMI figure was a testament not only to manufacturing growth in August, but continued growth for the 16th consecutive month in the overall economy. (A PMI reading in excess of 42%, over a period of time, generally indicates an expansion of the overall economy). The reading also indicated expansion in the manufacturing sector for the 13th consecutive month. A reading higher than 50% indicates that the manufacturing sector is generally expanding; below 50% suggests contraction.

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