When the reading dips under 50%, it's telling you manufacturing activity is contracting. Pretty straightforward.

But here's the thing most people miss: if that same index stays above 42.3%, the broader economy is typically still expanding. Not shrinking. Expanding.

So you can have manufacturing pulling back while the overall economic picture remains in growth mode. It's one of those counterintuitive data points that catches traders off guard if they're only watching one side of the equation.