Manufacturing ISM Expands , Rate Slows, Internals Weak
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Inquiring minds are digging into details of the September 2010 Manufacturing ISM Report On Business®
Economic activity in the manufacturing sector expanded in September for the 14th consecutive month, and the overall economy grew for the 17th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.September ISM Manufacturing at a Glance
"While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging. The growth of new orders continued to slow, as the index is down significantly from its cyclical high of 65.9 percent (January 2010). Production is currently growing at a faster rate than new orders, but it typically lags and would be expected to weaken further in the fourth quarter. Manufacturing has enjoyed a stronger recovery than other sectors of the economy, but it appears that weaker growth is the expectation for the fourth quarter. Both the Inventories and Backlog of Orders Indexes are sending strong negative signals of weakening performance in the sector."
New Orders June Thu September
Falloff in the rate of growth of new orders is persistent and dramatic.
Inventories June Thu September
The backlog of orders is now contracting, and judging from the persistent trend in orders, it is highly likely orders will contract next month. Meanwhile inventories continue to rise.
This situation cannot last. Production is headed for a plunge if orders and backlog start contracting in a meaningful way, as appears likely.
Manufacturing ISM has likely peaked.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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