The actual headline of the attached article is:
“US Manufacturing Expands More Slowly In June”
By reading the headline you would think that we are in a worse position. But, we have 13 straight months of growth in US Manufacturing. So while we had a decrease of .1 from April (55.4 index in April and 55.3 in May), we have to remember that every month we are resetting the bar.
It is easier to think of this in terms of percentage. If March had a base number of 100 and we had 110% growth in April then the new base number in April is 110 (100 x 110% = 110).
That places Aprils base number at 110. So if we have a slower grow rate of 105% then we would have Mays base number of 115.
Not great at math but even I know that 115 is better than 110.
So why are these index’s important? Because it helps us check the pace of growth. But in terms of rates and capacity it tells us that what we are looking for (more products being created) that things continue to get better.
So watch the index’s but make sure you understand who the audience for the headlines are.