After 18 consecutive months of contracting, the manufacturing sector posted growth for the sector in August, according to the latest report from the Institute for Supply Management (ISM).
Norbert Ore, chair of ISM’s Manufacturing Business Survey Committee, said his reaction was “relief” to see the PMI, ISM’s composite index which covers the overall health of the manufacturing sector, rise four percentage points to 52.9 percent, marking the first time the index has climbed above 50 since the recession began.
Typically, the 50 percent mark is the dividing line between “growth” and “contraction,” whether in reference to the PMI or any other indices covered by the monthly ISM report.
It wasn’t exactly a surprise. August’s number represents the eighth straight month of increase for the index, and both Ore and ISM have been predicting the index would push past 50 in either the third or fourth quarter this year.
The ISM has also predicted that growth would continue through the rest of the year, paving the way for a stronger sign of recovery in 2010. The PMI alone, Ore said, will most likely stay above 50 until at least the end of the year. Even if it slips, it would have to fall 2.9 percentage points to go back to contraction, which Ore said is unlikely to happen.