The nation’s purchasing agents say the manufacturing sector declined last month. The Institute for Supply Management’s index fell below 50, indicating a contraction in activity–but just by a tiny, itty bit:
Two calming notes: the decline below 50 is very small, and an index value below 50 does not always associate with recession. The cautionary note: more times than not, a recession occurs when the ISM is below 50.
Business Strategy Implications: Time to be cautious, work on the contingency plans, especially if you sell to manufacturing companies. (That includes equipment manufacturers, suppliers of maintenance, repair and operations materials, as well as vendors of raw materials.) However, it is too early to really hunker down.
Other Blogs Posting on This Topic: Capital Spectator with his typically great analysis; Big Picture, who has revised upward his probability of recession; a Dash of Insight’s good insight is that a contraction in manufacturing is not the same as a contraction in the economy; and Theroxylandr in Flame makes case for a bear market in stocks.