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MAPI QuickPoint - A glance at a building block of worldwide business data  MAPI QuickPoint

Analysis on ISM Index: 
Manufacturing Continues to Outperform General Economy

The following is an analysis from Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, regarding the Institute for Supply Management (ISM) Index for August 2010 (the ISM Index was 56.3 percent, an 0.8 percentage point improvement over July).

“Manufacturing has consistently outperformed the pace of growth in the general economy during this recovery,” he said.  “For example, GDP increased only at a 1.6 percent annual rate in the second quarter of 2010 but manufacturing industrial production expanded at a 7.9 percent rate.  Amidst evidence that the general economy is slowing to a crawl, this report indicates that manufacturing activity continues to grow at a healthy pace.  Industrial firms are building inventories that were depleted during the recession and exports are surging in machinery and equipment and material industries. 

“The strong growth in manufacturing production is partly catch up for a substantially more severe recession in the industry than the overall economy,” he added.  “Also, the depth and length of the previous downturn built pent up demand for replacing big ticket consumer goods and repair and replacement in business.  We expect manufacturing production to decelerate in the near term but still grow faster than overall GDP.”



 
   

Issues in Brief  Issues in Brief

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On the back of the strong domestic economy, China's labor market conditions have improved greatly. However, manufacturers in the coastal area are finding it more and more difficult to find young migrant workers to help fill the export orders.
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