U.S. Manufacturing and Non-Manufacturing Activity
Chart of the Week for August 14, 2015 - August 20, 2015
The Institute for Supply Management ("ISM") produces two indexes on a monthly basis that are widely followed U.S. economic indicators. The ISM Manufacturing Index is based on surveys of more than 300 manufacturing firms and monitors employment, production inventories, new orders and supplier deliveries. The ISM Non-manufacturing Index is based on surveys of more than 400 non-manufacturing firms' purchasing and supply executives, and monitors business activity, new orders, and backlog of orders, along with other indicators. A reading above a value of 50 in either index indicates that portion of the economy is expanding.
As shown by the chart above, both index values traded in relative tandem at levels between 55 and 60 from July 2014 through November 2014. Beginning in December 2014, the index values began to diverge, as the Manufacturing Index declined on a monthly basis through April 2015 while the Non-Manufacturing Index remained relatively stable through the same period. In April 2015 through June 2015, the Manufacturing Index increased while the Non-Manufacturing Index generally declined. In July 2015, the Non-Manufacturing Index had its largest gain since 2008, and was at its highest level since 2005, while the Manufacturing Index declined. Some economists have cited factors for the divergence to include manufacturing being hampered by a strong U.S. dollar, less energy-related investment, and weak global demand, while generally stronger employment, business orders, and inventories are cited as supporting non-manufacturing.
Posted by: sarah_oz@yahoo.com
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