PMMI: Sustained, Slower Growth Forecasted in 2011

• Corporate Bond Prices have resumed an upward march after dropping briefly in late 2009.
• The U.S. Leading Indicator has fallen steeply since it peaked in March. The drop resulted from recent stock market “roller coaster rides,” declines in building permits and faster supplier deliveries.
• The Purchasing Managers Index is also in steep decline off a December 2009 peak. The monthly Index has fallen each month since April, but has stayed in the growth range. New orders, production, and in particular manufacturers prices have seen the most pronounced deceleration.
• The Money Supply was flat for nine months, with zero change from November 2009 to July 2010. That sluggish growth has not yet acted as a brake on Industrial Production, but is one reason for the expectations of slower growth in 2011.
• The Industrial Production Index moved into “Phase B”—i.e., growth mode—in July, and is continuing the upward trend. This index is up by 0.8 percent over this time last year, and leading indicators and internal dynamics point toward continued growth through the end of the year, up until a slowdown in 2011.