Unusually this month, the ISM manufacturing index was delayed one day after the first business day of the month. In other words, it was released this morning instead of yesterday.

In any event, a refresher that because manufacturing is of diminishing importance to the economy, and was in deep contraction both in 2015-16 and again in 2022 without any recession occurring, I now use an economically weighted three month average of the manufacturing and non-manufacturing indexes, with a 25% and 75% weighting, respectively, for forecasting purposes.

In the indexes, any number below 50 indicates contraction. It used to be the case that numbers below 48 indicated recession. Now the ISM says that any number above 42.5 is consistent with expansion. 

In December, the total index rose 0.9 to 49.3, while the more leading new orders subindex improved 2.1 further into expansion territory at 52.5. 

Including this month, here are the last six months of both the headline (left column) and new orders (right) numbers:

JUL. 46.8. 47.4

AUG 47.2. 44.6

SEP 47.2. 46.1

OCT 46.5. 47.1

NOV  48.4. 50.4

DEC 49.3. 52.5

Here is what the total index looks like graphically for the last three years:

(Click on image to enlarge)

And here is the graph of the last three years for the new orders subindex:

(Click on image to enlarge)

The three month average for the manufacturing index is 48.1, and for the new orders component 50.0. For the past two months, the average for the non-manufacturing headline has been 54.0 and the new orders component has been 55.5. Thus, unless the non-manufacturing index for December completely tanks when it is reported on Monday, the combined indexes strongly suggest continued expansion for the next few months.

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