Wednesday, July 1, 2009
The purchasing manager's index of manufacturing activity has improved dramatically this year. As this chart suggests, it is now very close to the level which is consistent with a flat economy (i.e., the recession is all but over). Another undeniable green shoot. The prices paid index has risen to 50 (which means half of those reporting are seeing rising prices and half are seeing falling prices), and I think that reflects not only the widespread rise in commodity prices, but also the fact that conditions are not so weak that they are leading to destructive or widespread price-cutting. When the prices paid index rises to 50 that has typically signalled an economy in recovery mode.
Posted by Scott Grannis at 8:10 AM