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U.S. Manufacturing on Fire?

CAMS Weekly View from the Corner – Week ending 9/72018

September 10, 2018

The Institute of Supply Management (ISM) is the largest private not-for-profit entity that advances the practice of supply management on a global basis.  Having been around for decades their membership is large and broad in regards to the numerous industries their membership represents.

The ISM has been surveying said membership regularly for decades and simultaneously has published their ISM Manufacturing Report on Business.  Their monthly report has become an established economic indicator.  A key measure within this report is the Purchasing Managers Index which is made up of various measures of activity.

A number above 50 for the PMI represents growth and below 50 represents contraction.  Moving further away from 50 in either direction represents enhanced strength or weakness.

This past week the PMI for Manufacturing in August came in at an astounding 61.3.

Putting this into perspective, this is the highest reading this manufacturing indicator has reached since August of 2004.  Adding to this, at that time, this level was attained briefly and then retreated swiftly.  Prior to the 2004 time we have to go back to the mid-1980’s to see readings this strong.

In recent months we have been holding the high 50-to-low 60 levels which speak to consistent strength unlike the short visit to these levels experienced in 2004.

In addition, per the table above, New Orders and Production, which are components of the overall Index, posted continued notable strength that also is accelerating.

In the case of New Orders (representing the much needed pipeline of future strength) this report reflects the longest run above 60 dating back to the early 1970’s. 

All told, per the Institute for Supply Management’s Manufacturing Index, the U.S. manufacturing base is rock solid.

If you are a consistent reader of these Weekly Views you may recognize our on-going theme that we need to see solid economic growth moving forward to fundamentally support our highly valued markets.

The type of growth displayed in the above results is pointing to what we need to see on a continued basis.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Portfolio Manager, CAMS Spectrum Portfolio


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