According to the latest Institute of Supply Chain Management Report on Business, their manufacturing index (PMI) stood at 35.6% for January 2009.  This represents an 8.21% increase over the December 2008 value of 32.9%.  Economists survey by Thomson Reuters had projected the index to decline slightly to 32.6%.  In a more drastic jump, the ISCM “New Orders” index jumped 43.7% to 33.2% in January, up from 23.1 in December 2008.  It is important to note that a PMI value in excess of 41.2% indicates that the overall economy is expanding.  While the January numbers aren’t quite there yet, they are heading in the right direction.  If the economy were to continue the same month over month growth, we would exceed the 41.2% inflection point by March of 2009.

While we are still talking about the indexes declining, they are declining less than before and less than was expected.  This represents at least the second economic report this week where the economy has performed better than expected.  I doubt anyone foresees a “V” shaped recovery.  The slowing rate of decline could be an early indicator that we are finding the bottom of a “U” shaped recovery.