Has the US manufacturing sector’s growth already started its cyclical descent?
I am going to call a top here however. If you look back at the historical data, there have been no readings higher than this in nearly three decades. The last ISM number higher than 61.4% was a monster 69.9% reading from December 1983. So what does that mean going forward. In terms of growth of the manufacturing sector, it means that we are hitting maximum growth. I would expect the manufacturing sector to add less to overall GDP going forward.
–Manufacturing still firing on all cylinders, 1 March 2011
The April 2011 Manufacturing ISM Report On Business came out today and confirmed the slight downward path we have seen since I wrote that paragraph two months ago. Mind you, 60.4% is still a very robust reading. Nevertheless, I still believe the manufacturing sector’s contribution to overall GDP growth has peaked.
Watch out for inflation though. Costs are poised to feed through in a demand destroying way.
Source: April 2011 Manufacturing ISM Report On Business® – ISM