Depression III, Double Dip Recession, Cooling or Slowing Economy?
by Sabrient - July 9th, 2010 11:26 pm
Depression III, Double Dip Recession, Cooling or Slowing Economy?
Courtesy of Ron Rutherford
The Institute of Supply Management (ISM) has again graced us with another two reports on the Manufacturing and Non-Manufacturing ISM Report On Business®. In this and other posts on the ISM, we wish to delve deeper into the raw numbers and get a better degree of understanding of the underlying currents in the macro-economy. Along the way let us also look at other voices and opinions of the macro-view.
Headline Numbers of ISM Report On Business®.
The PMI index {manufacturing index} was reported as 56.2% and NMI (non-manufacturing index/composite index) was reported as 53.8%. Both numbers missed Market Watch’s Economic Calendar consensus numbers with ISM Manufacturing consensus at 59% and Non-Manufacturing at 55.3%. Econoday reports ISM Mfg Index as 59 consensus and the range as 57.6 to 59.7 and ISM Non-Mfg Index as 55 consensus and the range as 53.5 to 56 which indicates that only non-manufacturing fell within the range of consensus.
Both reports are remarkably similar in that the composite chart is marked most prominently in “Slower” under the rate of change. The indexes and indicators are mostly growing but are growing at a slower pace. Considering the number of months of trending growth especially in the manufacturing report, this slow-down could just be head winds slowing progress or just a small hill that will easily reverse and accelerate the growth in future months. I am just not certain that the slow-down is worth wringing hands over, but could easily frighten the equity markets as they appear to have done prior to this past week. Econoday notes the possible reaction from markets.
Today’s report is not good news for the stock market which may continue to discount economic slowing for the months ahead. Today’s report will also increase talk that new rounds of government stimulus may be in order.
Not sure another stimulus is a prudent move at least at this time. I also want to quote from both reports on the recent cooling episode.
Peak growth may have already come and gone, a worry of the global markets and indicated by the ISM’s June report on non-manufacturing.
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The acceleration in manufacturing cooled but only slightly in June, according to the Institute for Supply Management’s composite index which slowed to 56.2 from May’s