"Manufacturing grows for 12th straight month!"
-- Reuters

"Factory sector slows again in July: Manufacturing sector at 55.5% is lowest in 2010."
-- Marketwatch

Make up your minds, guys. Which is it? Is American industry chugging along in the 12th straight month of an economic recovery, or are we halfway back to hell-in-a-handbasket? Well ... the truth is that it depends very much on how you look at the numbers.

First, the good news
The good news here is that Reuters is right. Though the rate of growth is slowing, we are in the 12th straight month of an industrial recovery, as confirmed by the recent bullish earnings reports out of United Technologies (NYSE: UTX), Textron (NYSE: TXT), and Caterpillar (NYSE: CAT) -- and more.

And the good news doesn't stop there. Dig into the details of Monday's report from the Institute of Supply Management, and you'll discover that U.S. exports have been expanding for 13 straight months. Just last week, General Electric (NYSE: GE) and Eaton Corp. (NYSE: ETN) announced they'll be supplying parts for the new Chinese C919 airliner. (Remember what I said, Boeing (NYSE: BA)? Watch your back.)

Now the bad news
Problem is, once you get started ferreting out the details behind the "56.2 becomes 55.5" story, it's awfully hard to stop. To this Fool's eyes, the numbers that loomed largest in the report were the three components of the ISM report showing the biggest changes since June:

  • Production: down 4.4%.
  • New orders: down 5%.
  • Inventories: up 4.4%.

Excuse me? Production's down from last month, and new orders are starting to stall ... ("Slow economy has killed sales for new equipment orders," ran one pithy quote included in ISM's report.) Yet inventories are still rising? To me this suggests warehouse shelves starting to sag under the weight of unsold goods, purchasers snapping their checkbooks shut, and factories ratcheting down production in response. It looks to me like an economy starting to run out of steam.

Foolish takeaway
Listen, Fools, I'm not saying we're standing on the brink of a double-dip recession. But I'm not not saying it, either.

Take the Foolish Rorschach test. Do you see something different in today's chart? Tell us about it below.

Fool contributor Rich Smith does not own shares of any company named above. Rich is not a licensed economist, but he plays one on the Web. Check out his latest stock recommendations on Motley Fool CAPS. The Motley Fool has a disclosure policy.