The ISM manufacturing index (formerly known as the NAPM Survey) is constructed so that any level at 50 or above signifies growth in the manufacturing sector. A level above 43 or so, but below 50, indicates that the U.S. economy is still growing even though the manufacturing sector is contracting. Any level below 43 indicates that the economy is in recession.
43.5
The nation's broadest measure of the health of the manufacturing sector rose from 48.3 in February to 48.6 in March. Recall that a reading above 50 indicates that the manufacturing economy is generally expanding and below 50 indicates that it is generally contracting.from The Mess Greenspan Made
The nation's broadest measure of manufacturing activity, the ISM Manufacturing Index, plunged back below the expansion/contraction line in February for the second time in three months, close to the five year lows reached in December.
In the U.S., a key barometer of the strength of the service sector dropped to its lowest level since October 2001, and suggested those businesses are now contracting. In Europe, a similar indicator fell to a four-year low.
The readings fanned fears on Wall Street that the U.S. is about to tip into recession, if it hasn't already done so, particularly startling analysts who had viewed services as the nation's last bastion of economic growth.
Yesterday, the Institute for Supply Management said its index of nonmanufacturing business activity, which is based on a survey of purchasing managers in service industries, fell to 41.9 in January from 54.4 in December. That was the sharpest decline in the survey's 10-year history. (A reading below 50 indicates the industries are shrinking.)
