This metric adjusts the volume of sales in the manufacturing sector for inflation.

Monitoring this helps us understand the health of the manufacturing industry and can offer early signs of economic change. 

An increase implies robust industrial activity, whereas a decrease can point towards shrinking demand and may be an early sign of economic slowdown.

The manufacturing sector is highly sensitive to changes in interest rates and consumer demand.

Manufacturers will often cut back on production and reduce inventory levels when they foresee a decrease in demand, providing early signals of a potential economic downturn.

Recession Signal

There is no magic number that might signal a recession, using this indicator.

The NBER assess this metric by looking at:

1. Depth refers to the intensity of the economic downturn.
2. Diffusion indicates how widespread the downturn is across different economic sectors.
3. Duration measures how long the downturn persists.

Where a persistent and widespread drop could suggest a recession is underway or imminent.

Track this yourself

You can see the Real Manufacturing Sales data on FRED, here: https://fred.stlouisfed.org/series/CMRMTSPL