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.

ISM April 2011

Source: April 2011 Manufacturing ISM Report On Business® – ISM


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.