Manufacturing a dizzying tale of two sectors

Last month’s flat PMI set off another round of hand-wringing by the national business press, the latest in the entertaining spectacle of media deciding manufacturing’s fate.

Pundit’s are confused — often in the same article.

From MarketWatch in late January, “Opinion: U.S. manufacturing teeters on the edge of recession“:

“Capital spending is down.” Bad news. “But production and hiring are still rising.”

Whew.

But hold on. “Some people are using the ‘R’ word. They are saying that U.S. manufacturing is in a recession.”

Not good.

“Spoiler alert: The preponderance of the evidence shows that the factory sector has decelerated but is not in a ‘recession’ yet.”

Relief!

Well, not so fast. A headline in Business Insider the same week exclaimed, “Manufacturing is still in recession.” Rats.

“We got the two big data points on U.S. manufacturing during January on Monday. They both showed that new orders from American manufacturers picked up last month while job gains slowed.”

I thought hiring was still rising? Confusion.

“And overall, the sector is still in recession.” Damn.

“The Institute of Supply Management’s PMI shrank for a fourth straight month and came in at 48.2, versus 48.5 expected. Any headline reading below 50 is in contractionary territory, and prints under 45 are historically associated with recessions.”

But we’re over 45. So we’re not in recession? Exhale.

Enter Bloomberg Business: “Manufacturing in U.S. Shrank in January for a Fourth Month.” Here we go again.

Subhead: “New orders, a leading signal for production, resume expansion.” Expansion! We’re back!

“The 48.2 reading,” was “lower than the 48.4 median forecast in a Bloomberg survey of 79 economists. Levels less than 50 for the gauge indicate contraction.” What? We’re contracting again, within two paragraphs.

Not really! “This may be signaling the start of some stabilization in manufacturing activity and U.S. economic activity,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York.

The patient is stable.

Seriously, I could go on.

To be fair, it’s easy to understand why analysts are confused. Manufacturing is bipolar. It’s in transition, one that confounds even as we glimpse a promising future.

It’s a sector that doesn’t matter anymore. Or it’s a bellwether.

Exports are struggling. But domestic consumption is rising.

Energy’s in the tank, but other industries are high-growth.

Manufacturing labor is retiring or just entering the workforce — with a shortage in between.

And more.

Who said manufacturing is boring?

Bart Taylor is founder and publisher. Reach him at btaylor@companyweek.com.