Courtesy of Mish
Let’s take another look at the alleged manufacturing signs of life starting with today’s ISM report.
The Econoday consensus estimate was 52.2 in a range of 51.2 to 53.0.
The Manufacturing ISM came in at 49.4.
Highlights
August was a disappointingly flat month for ISM’s manufacturing sample where the composite index posted its first contractionary sub-50 reading since February, at 49.4 for a more than 3 point decline.
Details are likewise soft including new orders which, after a long solid run, fell nearly 8 points to 49.1 for their first sub-50 score since December. And backlog orders are in deepening contraction, at 45.5 for a 2.5 point decline. Production is just below 50 as are inventories and also employment, which at 48.3 is under 50 for the eighth time in nine months.
This report has been very solid in recent months especially new orders, important considerations that limit August’s negative indications. Factory data have been struggling all year and this report takes some of the shine off very solid government reports in July when both industrial production and durable goods orders posted good gains. Watch for July factory orders on tomorrow’s calendar.
Just an Anomaly
Quote from WSJ report ISM Manufacturing Index Showed Contraction in August.
Manufacturing ISM Components
| Index | Aug | July | PP Change | Direction | Rate of Change | Trend in Months |
|---|---|---|---|---|---|---|
| PMI® | 49.4 | 52.6 | -3.2 | Contracting | Slower | 1 |
| New Orders | 49.1 | 56.9 | -7.8 | Contracting | Slower | 1 |
| Production | 49.6 | 55.4 | -5.8 | Contracting | Faster | 1 |
| Employment | 48.3 | 49.4 | -1.1 | Contracting | From Growing | 2 |
| Supplier Deliveries | 50.9 | 51.8 | -0.9 | Slowing | Slower | 4 |
| Inventories | 49.0 | 49.5 | -0.5 | Contracting | Slower | 14 |
| Customers’ Inventories | 49.5 | 51.0 | -1.5 | Too low | Same | 1 |
| Prices | 53.0 | 55.0 | -2.0 | Increasing | Slower | 6 |
| Backlog of Orders | 45.5 | 48.0 | -2.5 | Contracting | From Growing | 2 |
| New Export Orders | 52.5 | 52.5 | 0.0 | Growing | Slower | 6 |
| Imports | 47.0 | 52.0 | -5.0 | Contracting | Same | 1 |
Manufacturing ISM:49.4. Not a single economist expected contraction.
— Mike Shedlock (@MishGEA) September 1, 2016
Mike “Mish” Shedlock
