- by New Deal democrat
The regional Fed August indexes, including both manufacturing and general business activity, rebounded sharply, telegraphing that a rebound was also likely in the ISM indexes. On Tuesday, the ISM manufacturing index rose slightly. This morning the ISM services index increased sharply.
To wit, the headline number increased to 52.0, while the new orders index rocketed all the way to 56.0:
As a result, the three month average of the headline number rose 0.7 to 51.0, and the new orders subindex rose 3.2 to 52.5.
For a read on the general economy, I assign a weight of 75% to the services index and 25% to the manufacturing index. Here is what the comparison of two headline numbers looks like:
Since the three month average of the manufacturing index was 48.6, the economically weighted headline number rose above 50 to 50.4.
Next, here is the comparative look at the two new orders indexes:
Since the three month average of the manufacturing new orders subindex was 48.3, the economically weighted new orders number rose sharply to 51.5.
This takes the economically weighted averages back out of “recession watch” territory. Because of the ever-changing situation with tariffs, I expect the monthly ISM numbers to be particularly volatile, so this isn’t really an all-clear vs. a respite. But the bottom line is, the economically weighted averages are at back a level suggesting a weak continuing expansion.
