Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the ISM Index and GDP.

  • The manufacturing sector is on the verge of contracting after having notched 22 straight months of expansion. The latest reading of the ISM index, which surveys managers in the manufacturing industry, was 50.9 in July. It had been reading 55 to 60 in the first half of this year. Any reading below 50 is considered contraction in the industry.
  • The component on new orders showed contraction, though actual current production and employment showed slight expansion.
  • The constant discussion over the debt ceiling in July no doubt caused many business decision makers to halt purchase orders. A resolution to the debt debate may slowly restart the manufacturing sector.
  • This data is one of the timeliest economic indicators. The weak July reading implies that the third quarter GDP will continue to underperform with no notable downward movement to the unemployment rate.
  • GDP in the third quarter is expected to show 1 to 2 percent growth. It needs to grow at 3 percent or higher for firms to hire new workers in a meaningful way.

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