Manufacturing PMI Analysis: A Contracting Economy

Manufacturing PMI Analysis: A Contracting Economy

Published At: Sep 15, 2024 by Verified Invesing
Manufacturing PMI Analysis: A Contracting Economy

The Manufacturing PMI for the United States currently sits at 47.20. Anything below 50 shows contraction within the manufacturing sector. Anything above 50 shows expansion.

The further above or below 50, the sharper the expansion or contraction in the economy.

Based on the current data, the manufacturing sector has been contracting slowly since late 2022.

The Concern

For an economy that has seen job growth and strong consumer spending, it is concerning to see a manufacturing sector in contraction. It is even more concerning should job growth go negative and consumers really start cutting back on their spend.

In addition, tariffs were supposed to bring more manufacturing to the U.S. That does not appear to be happening. In that case, the tax/inflation brought on by tariffs is having little benefit.

Keep an eye on the ISM Manufacturing PMI in the coming months. It may be a leading indicator of economic weakness.