The July report on manufacturing activity reflects an economy turning the corner from recession to recovery (see ISM's table below). The critical components are, from my perspective, the Backlog of Orders growing from 47.5 (contracting) to 50.0 (neutral) while Customer’s Inventories contracted from 43.5 to 42.5 and new orders jumped from contracting in June (49.2) to expanding (55.3). The turn is something that I have been pointing to these past several months in my various blogs examining leading indicators. Do not get thrown off by general commentary that one industry or another is still in the doldrums. The different sectors of the economy grow at different rates, some even contracting while others expand, and not all turn when the overall economy turns – either into recession or into recovery. The upturn I have forecast is going to be a slow process and it will be quite a while until employment is growing faster than the labor force.