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No soft patch in manufacturing

January 06, 2021

chart depicting Time to the First 60.0+ Reading in the ISM Manufacturing Index from Beginning of Recessions

Source: Institute for Supply Management

The ISM manufacturing index came in much better than expected for December, rising by 3.2 points to a 28-month high 60.7. The increase was driven in part by holiday-related bottlenecks (note the surge in supplier delivery times), but the gains were still broad-based, with all five components moving to the upside for only the third time in the last four years. The commentary from respondents was also mostly upbeat, as several indicated that demand remains solid despite the resurgence in new COVID cases.

So this continues to be a very unusual soft patch in that the factory sector has not only been spared, but has actually strengthened since the downshift took hold. This is, of course, a reflection of the fact that COVID-driven economic weakness is much more a supply shock than a demand shortfall, a setup that bodes extremely well for the pace of expansion once the pandemic finally runs its course. The demand destruction that typically continues to weigh on the economy well after recessions come to an end has been limited in this cycle, setting the stage for booming growth as supply conditions normalize.


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Which metropolitan area is home to close to half of all economists working in the U.S.?

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Pre-pandemic, approximately how many meetings were held in the U.S. each day?


55 million


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