ISM Index: Strong V-Shaped Recovery Underway

Posted on 11/02/09 at 11:29am by Professor Mark J. Perry

NEW YORK (AP) — A private measure of U.S. manufacturing activity grew in October at the fastest pace in more than three years, helped by government spending and higher demand from overseas. The better-than-expected reading is a positive signal for the fledgling economic recovery.

The Institute for Supply Management, a trade group of purchasing executives, says its manufacturing index read 55.7 last month, compared with 52.6 in September. It's the third straight reading above 50, which indicates growth.

MP: This is the strongest level for the ISM index in three and one-half years, since April 2006, and is now at a higher level during the current economic expansion than during the 2002 economic recovery (see chart above).

Update 1: Graph has been updated with explanation of the shaded recession areas.

Update 2: According to Scott Grannis, the ISM rebound suggests we'll have Q4 real GDP growth of 4-5%.

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