The December drop in the ISM (Institute for Supply Management) Manufacturing Index seemed to bring the bad news that many feared and yet wanted to see—like a scary scene in a horror movie. The one-month fall was eye-catching: 5 percentage points, the sharpest since the end of 2008. It bolstered fears that the trade war with China has started to take a toll on U.S. economic activity.
But something in the data does not quite add up. We should be careful not to rush to see just what we want to see.
Initial reactions were quick to link the December drop in the manufacturing ISM to protectionism and slowing global growth. But the sub-index for new export orders increased, to 52.8 from 52.2, showing that export orders not only kept growing, but grew at a faster pace in December than in the previous two months.
Read the full perspective at forbes.com.