Courtesy of Pam Martens.
Data From Institute for Supply Management Shows U.S. Manufacturing Contracting in May 2013
The Institute for Supply Management’s (ISM) manufacturing index contracted in May to a reading of 49, the lowest level since it registered a reading of 45.8 percent in June 2009. A reading below 50 means the manufacturing sector is contracting.
The data, called the PMI or Purchasing Managers’ Index, is based on a survey of more than 300 purchasing and supply executives from around the country who respond anonymously to a monthly questionnaire. With the exception of a four-year interruption during World War II, ISM has published the data monthly since 1931.
Both the index and a number of its individual components showed broad-based weakness in May. ISM’s new order index registered 48.8 percent in May, a decrease of 3.5 percentage points when compared to the April reading of 52.3 percent. The Backlog of Orders Index registered 48 percent, a 5 percent drop from the 53 percent reported in April. The New Export Orders Index registered 51 percent in May, which is 3 percentage points lower than the 54 percent reported in April.
None of this data is consistent with a raging U.S. stock market that is regularly setting new highs while a large swath of the global economy contracts. The data also removes the likelihood that the big worry last week – that the Federal Reserve might begin to taper back its monthly $85 billion purchases in the bond market – is a decidedly premature worry.
In his May 22, 2013 testimony to the Joint Economic Committee of Congress, Federal Reserve Chairman, Ben Bernanke, had this to say:
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