Unexpected but welcome rise in the ISM manufacturing index

October 3, 2011

The latest manufacturing numbers from the Institute for Supply Management (ISM) index caused a great deal of welcome surprise among economists and industry figures. Despite predictions of a decline in this statistic, the numbers rose to 51.6 in September from a 50.6 total in August. This is likely to come as a welcome and positive sign among manufacturers, many of whom are still understandably cautious due to larger, more negative trends in the industry.

According to Bloomberg, a total of 82 economists participating in a survey it conducted last month made estimates falling between 45 and 52 for September's ISM manufacturing numbers. The median estimate of the respondents projected a drop to 50.5.

That expected drop of only 0.1 would still have been seen as a negative development by many, since 50 is considered the boundary between manufacturing expansion and contraction, although 42.5 or higher is often emblematic of an overall economic expansion, the news source reports.

The ISM increase was due in large part to gains in exports and production and was accompanied by a decline in European manufacturing. International demand is projected to help keep this small recovery on its current path.

While manufacturing rose, construction spending also managed to increase, but that industry is still considered to be suffering, according to the Associated Press