Missing Manufacturing

The most cited manufacturing index, the ISM Manufacturing index, is at 57.5, just slightly below its two year high of 59.3, and consumer spending on goods is 8.4% above its pre-pandemic high. Yet industrial production is 4.9% below its 2/20 level and manufacturing activity is down 4.4%. The only explanation for this anomaly; manufacturers’ customers drawing down inventories to meet demand. Fortunately, this’ll soon end, boosting growth in weak 21Q1.