June ISM Report Shows Q2 Trough in Recession

The “Report on Business” for June from the Institute for Supply Chain management this morning says manufacturing activity in the month failed to grow, month over month, for the 17th consecutive month, but the rate of decline continued to slow, while economic activity overall rose for the second straight month. The group’s assessment is that the economy is growing faster than it was in May, while manufacturing is declining less several — or, “contracting slower,” in ISM speak. The purchasing manager’s index, or PMI, stands at 44.8, up from 42.8 in May and way up from 32.9 in December, though, as you know, a PMI below 50 still indicates a contracting manufacturing sector. ISM notes that industry continued to reduce inventory in June, but that the process is nearing a bottom.

In a report this morning, investment advisory house RDQ Economics writes that the report is “the clearest sign yet that the recession may be ending” and dates the recession’s trough in the second quarter. RDQ notes that China’s own PMI has been above 50 for four consecutive months, including June’s 53.2 reading, which was up 10 percentage points from May.