Manufacturing V-shaped recovery continues

This is a chart of the Chicago Purchasing Manager's Index, whose February reading, released today, exceeded expectations (62.6 vs. 59.7). The Chicago index has traditionally been highly correlated (0.87) to the overall ISM index, which will be released Monday. That index, in turn, has done a pretty good job of tracking the quarterly growth of GDP, as shown in the next chart. What it all means is that the recovery in the manufacturing sector has been remarkably dynamic, and this strongly suggests that the economy will experience growth of at least 4% in the current quarter.