“We don’t make anything anymore.” “We’ve lost our manufacturing base, and now we’re losing the service sector, too.” These sentiments were heard regularly eleven years ago when the country was debating NAFTA. Now callers to talk radio and letter-writers to local newspapers are repeating these claims by rote and with minor variations on a daily basis. This latest “threat spike” of protectionism has emerged with the frenzy over the outsourcing of service-sector jobs.
Anybody who gets economic information exclusively from television news could easily fall under the impression that the manufacturing sector and, more recently, the service sector, have been the victims of a precipitous decline. On the other hand, those who simply look at the actual numbers will find that service output in America is not only the highest in our nation’s history, but is also accelerating at the highest rate in the country’s history. Manufacturing growth, according to one survey, is near its peak. According to another respected survey it has never been higher.
A week ago the Institute for Supply Management released the ISM Report on Business for the month of March. The report included both the manufacturing and non-manufacturing index. The non-manufacturing index rose a rather large 5 percent in March from the previous month, sending it to 65.8 percent, the largest in its entire history.
The manufacturing index, the PMI, increased for the 10th consecutive month to 62.5 percent in March — a 1.1 percent gain from the previous month. The ISM website states, “A PMI in excess of 42.8 percent, over a period of time, generally indicates an expansion of the overall economy.”
The Institute for Supply Management isn’t the only source of good news for the manufacturing sector. The Manufacturers Alliance’s composite index of future business activity rose from 77 percent in December to 78 percent in March, a new record high for the second consecutive quarter.
All this of course is a matter of output, not employment. The confusion between the two seems to be a primary source of the media’s misleading coverage on manufacturing-sector growth. In short, the press has morphed news about the decline in manufacturing jobs into a story about a decline in manufacturing output — ditto for the service sector. BuzzCharts thinks, however, that a little less output in the manufacture of bogus stories about America’s alleged decline would improve the outlook for all of us.
Ignore the misinformation — the boom continues.
– Jerry Bowyer is the author of The Bush Boom and an economic advisor to Blue Vase Capital Management.He can be reached through www.BowyerMedia.com.