Manufacturing ISM Contracts 3rd Month Led by Declining New Orders; Recession-Type Numbers? You Bet!
Those looking for evidence the US is already in recession (and has been since June) need look no further than the August Manufacturing ISM Numbers released today.
| Index | August | July | Change | Direction | Rate of Change | Trend in Months |
|---|---|---|---|---|---|---|
| PMI™ | 49.6 | 49.8 | -0.2 | Contracting | Faster | 3 |
| New Orders | 47.1 | 48.0 | -0.9 | Contracting | Faster | 3 |
| Production | 47.2 | 51.3 | -4.1 | Contracting | From Growing | 1 |
| Employment | 51.6 | 52.0 | -0.4 | Growing | Slower | 35 |
| Supplier Deliveries | 49.3 | 48.7 | +0.6 | Faster | Slower | 7 |
| Inventories | 53.0 | 49.0 | +4.0 | Growing | From Contracting | 1 |
| Customers' Inventories | 49.0 | 49.5 | -0.5 | Too Low | Faster | 9 |
| Prices | 54.0 | 39.5 | +14.5 | Increasing | From Decreasing | 1 |
| Backlog of Orders | 42.5 | 43.0 | -0.5 | Contracting | Faster | 5 |
| Exports | 47.0 | 46.5 | +0.5 | Contracting | Slower | 3 |
| Imports | 49.0 | 50.5 | -1.5 | Contracting | From Growing | 1 |
Key Points
- The PMI™ registered 49.6 percent, a decrease of 0.2 percentage point from July's reading of 49.8 percent, indicating contraction in the manufacturing sector for the third consecutive month. This is also the lowest reading for the PMI™ since July 2009.
- The New Orders Index registered 47.1 percent, a decrease of 0.9 percentage point from July, indicating contraction in new orders for the third consecutive month.
- The Production Index registered 47.2 percent, a decrease of 4.1 percentage points and indicating contraction in production for the first time since May 2009.
- The Employment Index remained in growth territory at 51.6 percent, but registered its lowest reading since November 2009 when the Employment Index registered 51 percent.
- The Prices Index increased 14.5 percentage points from its July reading to 54 percent.
- Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies.
Recession-Type Numbers
Inventory added .6 to the PMI vs. a neutral reading of 50 or the PMI would have come in at 49.
The third month of declining new orders coupled with declining production strongly suggests that manufacturing employment will soon contract.
These are start-of recession type numbers.
Unless economic numbers quickly improve, the NBER is likely to backdate the start of the recession to June.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Manufacturing ISM Contracts 3rd Month Led by Declining New Orders; Recession-Type Numbers? You Bet!
Posted by Michael Shedlock at 11:35 AM
Disclaimer:The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.