A recession or fall in national income creates a important across the nation. It leads to higher unemployment, increased inequality, falling average income, and higher government borrowing.
The U.S. manufacturing industry is also going through a recession and that is for three consecutive months in January and the industry remained below a key threshold.
“The U.S. manufacturing industry is also going through a recession and that is for three consecutive months in January and the industry remained below a key threshold.”
Supply Management
On Wednesday, the Institute for Supply Management (ISM) revealed that its Purchasing Managers Index (PMI) for manufacturing has gone down to 47.4 in January. The latest Purchasing Managers Index for the U.S. manufacturing industry is one percentage point lower than the seasonally adjusted 48.4 percent rating recorded in December.
As per the ISM, a PMI above 50 percent for manufacturing indicates the economy is generally expanding, while a rating below 50 percent indicates manufacturing is “generally contracting.”
The ISM manufacturing PMI is now at its lowest level since May 2020, when it stood at 43.5 percent seasonally adjusted. This significant decrease occurred as COVID-19 spread across the United States.
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Index was 58.4 percent in February
The index was 58.4 percent in February 2022 before falling to where it is now. The index reached 50 percent in October before falling to 49 percent in November, 48.4 percent in December, and 47.4 percent at the end of January.
Timothy Fiore, ISM chairman, said, “The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for January (47.4 percent) corresponds to a -0.5-percent change in real gross domestic product (GDP) on an annualized basis,”.
The drop in manufacturing PMI of the ISM over the last month was more absurd than expected by economists. Those economists had anticipated the January index rating to only fall to about 48 percent.
Manufacturing accounts for approximately 11.3 percent of the total US economy.