Alligator jaws

The gap between services and manufacturing is rarely this large. Historically, when the gap gets this large, it has marked a bottom for manufacturing, but, sadly, also a peak for services. 

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Alligator jaws
Welcome to the Know the Difference Minute for Thursday, July 6th.
Alligator jaws can open wide. When their jaws are open, one thing you know is that the gap will close. There are a lot of gaps in the market and macroeconomic data. The biggest one on display this week is between the ISM Services index and the ISM manufacturing index.
According to the Institute for Supply Management, service sector activity expanded for the sixth straight month in June. Manufacturing on the other hand, contracted for the eighth straight month.
The gap between services and manufacturing is rarely this large. Historically, when the gap gets this large, it has marked a bottom for manufacturing, but, sadly, also a peak for services. The net effect has been a recession. The jaws will close and it’s likely going to be a mix of tentative stability from manufacturing and a bit of slowing in services.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute.