Industrial Buyers Index Soars, Report Shows

The ISM manufacturing index, derived from a monthly survey of industrial buyers, has been over the "60" mark for several months. This level suggests that manufacturing activity will be expanding early in 2004 at least at a 5% annual pace, and that GDP growth will be 4% at minimum.

Both the production and orders sub-indexes of the index have jumped to over 70, while the export sub-index has hit 60. These record levels assure accelerating growth in manufacturing.

Similarly, a parallel survey of non-manufacturing buyers has shown index levels of over 60 since June. This is consistent with other information, especially job data, that shows manufacturing lagging in this business recovery instead of in the more usual lead position.

The expected pickup in manufacturing means that the manufacturing-dominated cities in the Great Lakes, California, Northeast, and Upper South regions of the U.S. will be the fastest-growing regional markets through the end of 2004—even as the unemployment rate remains above the rate in service-dominated cities. Notably, the motor vehicle and building materials industries, typically the first to recover, got a jump-start from cheap credit in 2003, and will now expand noticeably slower than the rest of the manufacturing realm.