Line chart, tracks two manufacturing indexes: ISM Manufacturing PMI and ISM Non-Manufacturing PMI.
Y-axis: Index level (over 50=expansion); x-axis 2007 – 2021.
Recessions shown: December 2007 – June 2009 and February – April 2020.
ISM manufacturing and non-manufacturing indexes both fell considerably in the 2008 – 2009 recession, from a near 50 index level to less than 35 for the manufacturing index and from more than 55 to less than 40 for the non-manufacturing index. Both largely expanded after that recession, generally remaining above the expansion minimum of 50. But both trended down from recent highs near 60 in 2018 to lows near 40 in April 2020. Both had recovered significantly by the end of Q3 2020, with non-manufacturing near 58 and manufacturing above 55. By year-end, non-manufacturing stood near 57 and manufacturing near 61. As of the end of September 2021, non-manufacturing was at 61.9 and manufacturing at 61.1. A circle on the chart highlights recent activity.
Sources: Bloomberg, Institute for Supply Management, and Wells Fargo Investment Institute. Monthly data from January 1, 2007 to September 30, 2021. The Institute for Supply Management (ISM) Manufacturing Index® is a composite index based on five indicators with equal weights. The ISM Non-Manufacturing Index® is a composite index based on four indicators with equal weights.
Key Takeaways
- We believe that the rebound in U.S. services industries — now supported by the economy’s reopening and by earlier fiscal stimulus — will provide an added tailwind to the labor market recovery.
- Resilience of U.S. services industries along with a recovery of these frontline industries in Europe has added depth and breadth to the economic recovery in both regions.