The American manufacturing sector is booming, and has shown growth in the last 14 months straight, according to an Institute for Supply Management (ISM) survey released yesterday. Economic numbers reported today were mixed, with personal incomes rising 0.2% in June, and consumer spending dropping 0.7% also in June. Oil prices hit $44/barrel today, the highest they’ve been since 1983. With GDP still strong, accelerated business investment, and a booming job market, the U.S. economy is poised for a period of sustained growth.

The key measure in the ISM report on manufacturing is the “PMI.” It aggregates measures of production, new orders placed, employment, supplier deliveries, and business inventories with American manufactures into a single number. The PMI thus measures the health of the manufacturing sector, as well as the entire U.S. economy. Any PMI reading over 50 “represents growth or expansion within the manufacturing sector of the economy compared with the prior month.” For June, the PMI came in at 62.0%, which indicates strong manufacturing activity. June makes the 14th consecutive month of U.S. growth. In June, new orders, employment, and production showed faster growth than May, while inventories shrank. If inventories (supply) gets too low, increased demand for products could cause prices to tick up. But I’d rather have growth than no growth. The ISM report shows the overall economy grew faster in June than it did in May.

I wouldn’t worry too much about the 0.7% drop in consumer spending in June. This is most likely a blip -- consumers taking a breather -- than any indication of a longer-term trend. With the manufacturing boom, good paychecks are making it into the pockets of millions of factory workers. This was validated by the reported 0.2% rise in personal incomes for June.

The only cloud on the horizon seems to be oil prices. They hit an ungodly $44/barrel today. Demand has been high. Capacity at oil producing states and refineries is pretty much maxed out. More recently, Yukos, Russia's largest oil conglomerate, has gotten into troubles with that country’s tax authorities. Oil traders are worried that if Yukos goes under, a big dent will be placed in Russian oil production, which is second only to Saudi Arabia’s. But I’m not ready to panic yet.

The summer months usually see the highest oil prices, as the weather is good in the northern hemisphere, and lots of people travel. By the end of August, demand should slacken, and we should see lower oil prices.