Newton, Mass.— According to the Institute for Supply Management's latest Report On Business, the overall economy grew for the 22nd consecutive month. In addition, manufacturing's numbers improved for the second month in a row.

Standing out as well was the Purchasing Managers Index (PMI), which was measured at 54.7 percent in August — an increase of almost three percentage points over July (51.8). ISM's production index rose 8.3 percentage points, while its new orders index increased to 59.6 percent from July's 56.6 percent. The report was released on Sept. 2.

"The PMI is at its highest level since December of last year," said Norbert Ore, CPM, chair of ISM's Manufacturing Business Survey Committee. "Though two months of growth do not establish a trend, there is strength in the various segments of this report that we have not seen for some time…. The continuation of a second half recovery appears on track."

Are things really looking up? Is it time for optimism all around? As with any economic report these days, there were facts and statistics to support both the half-full as well as half-empty school of thought. Thus, opinions vary.

Jim Beckstein looks at the situation as president of the Industrial Distribution Assn. as well as owner of Mill Supplies, Inc. in Ft. Wayne, Ind. He also is an occasional contributor to INDUSTRIAL DISTRIBUTION. Recalling a recent column on the economy he did for ID, he said, "I really, honestly felt like things were coming back. But in August, it just seemed like things sort of fell out of bed. It's disconcerting."

"My outlook would be cautious optimism," said Charles Stockinger, executive director of the Industrial Supply Manufacturers Assn. He has watched for a few years as various institutes have issued various numbers and seen emotions and analyses swing in radically different directions.

So let's use "cautious optimism" as a sort of mantra these days — with added emphasis on caution when one gets to the employment numbers.

Unfortunately, manufacturing employment continued its decline in August as ISM reported it remained below the 50 percent breakeven point for the 35th straight month. The unemployment index hit 45.9 percent in August. It was at 46.1 percent in July. An employment index of 47.8 percent would be considered, over time, to be generally reflective of an increase in the Bureau of Labor Statistics stats on manufacturing employment.

Along with virtually the entire business community, the loss of jobs is a foremost concern with Stockinger and Beckstein, especially those lost overseas.

"China certainly is a tough hurdle," in terms of taking U.S. jobs, Stockinger said. "And I'm hearing the Pacific Rim mentioned more and more, too," referring to Taiwan, the Philippines and India as countries to which some industries have lost jobs.

The U.S. is not alone in these concerns.

"The Europeans are as concerned as we are by that trend," Stockinger adds. "I've heard from different folks that there are even some jobs moving from Mexico to China due to the wage differentials."

"The general manufacturing base is moving offshore into a global economy," Beckstein adds. "I say to everyone, 'Look, we're in a global economy, whether we like to think so or not.'"

Concerns over employment numbers and the overall situation also were reflected when the National Assn. of Manufacturers issued its annual Labor Day Report on August 27.

While applauding the positive manufacturing numbers, Jerry Jasinowski, president of NAM, pointed out that "manufacturing has lost more than 2.7 million jobs over the past 36 months, and no more than half of those jobs will return without urgently-needed policy changes.

"The good news is that recent economic data point to accelerating growth later this year and into 2004," Jasinowski said in a statement.

At the same time, though, he conceded that the manufacturing recovery was "the slowest on record since the Federal Reserve began tracking industrial production back in 1919."

He urged the Bush Administration and Congress to work together "to forge a pro-growth, manufacturing agenda that levels the international playing field, reduces the domestic cost of production, and provides additional assistance to workers."

One number that continues to stand out is the production index, up to 61.6 percent in August — an increase of 8.3 percentage points over July (53.3 percent.) An index more than 49.9 percent is consistent with an increase in the Federal Reserve Board's production figures.

"It's a continual theme of a jobless recovery," Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston, recently told Reuters. "Unemployment remains high, but the people who are working are extremely productive."

That may bode well for future profits and bottom line success, of course. But Stockinger applies the "cautious optimism" to the here and now.

"If there's going to be a recovery, it'll be more like a steady growth. I personally don't believe it will arrive as a big explosion," Stockinger said.