Current State of the Manufacturing Industry

According to a new Standard & Poor’s report, there are two key indicators that will tell you what kind of shape the manufacturing industry is in. The first is the Institute for Supply Management’s Purchasing Manager’s Index and the second is the Federal Reserve’s Capacity Utilization Index for motor vehicles and parts. A reading above 50 percent for the ISM index indicates that manufacturing is expanding in the US, and below 50 means that it is contracting. History shows that each time since 1983 that the index fell below 43 percent “speculative grade” automotive companies began to panic. Similarly any time the Fed’s utilization rate dropped below 72 percent during that period, it caused stress to automotive companies. Let’s take a look at where we stand as of December 2017: