key definitions
- PMI
- purchasing managers' index — 50 is often the expansion/contraction line.
- inventory cycle
- businesses restock and destock amplifying short swings.
- goods vs services
- post-pandemic goods boom then mean reversion highlighted the wedge.
equity sectors rotate with the manufacturing pulse — semis, machinery, transports lead early cycle.
do not ignore services PMIs when judging labor market durability.
early-1990s slump
manufacturing led the cleanup.
- inventorydestock.
- policyeasing.
industrials bottom before services employment.
PMI troughed under 50.
ISM
1995 to 2000 expansion
tech capex lifted manufacturing readings.
- capexboom.
- servicesstrong too.
late-cycle manufacturing heat can be policy bait.
PMI cyclically strong into 2000.
ISM
2001 recession and GFC
double manufacturing recession.
- housing2000s cycle.
- tradeglobal shock 2008.
manufacturing weakness + credit stress = avoid cyclicals.
PMI collapsed into 2009.
ISM
2010 to 2019 slow grind
manufacturing patchy; services carried jobs.
- oil2015 shock.
- dollar2013–2015 headwind.
flat manufacturing with calm credit can still lift broad indices via tech.
PMI oscillated near 50–60.
ISM
2020 to 2026 whipsaw
pandemic collapse, goods boom, normalization.
- goodsspike then fade.
- servicesreopening leader.
when goods mean-revert, do not confuse with full recession without services confirmation.
PMI crashed then rebounded before moderating.
ISM
refresh with actual ISM prints — stylized path illustrates typical recessions.
global manufacturing (China, EU) feeds US multinationals even with domestic services calm.