Manufacturing data improves

During the month of October the Institute of Supply Management (ISM) index of manufacturing activity expanded to 55.7 from 52.6 in September. The way the index works is that any number above 50 indicates expansion. October’s reading was the highest manufacturing level since April of 2006. The director of the survey that provides the data for the manufacturing index said, “It appears that inventories are balanced and that manufacturing is in a sustainable recovery mode.”

What it means: This is clearly a very positive sign for the health of the economy. Implicit in the data are that blue collar jobs must also becoming more plentiful. An expansion of manufacturing activity to levels not seen for 3.5 years means that more employees are needed. We have talked about how employment recovery lags economic recovery. This is because of the expense of hiring employees, training them, paying them and then providing benefits for them. However, blue collar jobs are easier to add that white collar jobs. Primarily this is true because blue collar jobs typically have lower benefits than white collar jobs. So the above ISM data also suggest that the employment situation in the U.S. is improving, too.

Jason