ISM - A macro indicator going bad

The September ISM report is heading in a dreadful direction. I am posting the table with the details because sometimes we hear these reports in passing and do not appreciate the full weight of them. I use the word contraction often. But the actual components of the ISM show what that means in stark detail. Note the combination of still high prices and customer inventories with the severely contracting levels of most other measures of manufacturing activity.

This is the kind of data that will pressure the Fed to drop rates as they don't want to be perceived as micro-managing the bailout of a financial sector hopped up on greed and river boat gambling. But this? This is real economy stuff. We'll have more conclusions about that in this weekend's NFTRH.

Oh, and as an aside, welcome new subscribers and thank you for putting your trust in me! I will probably have a bit of a settling in period but I am going to put the pedal down on this thing as I get it in gear.

MANUFACTURING AT A GLANCE SEPTEMBER 2008
Index	Series Index September	Series Index August	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	43.5	49.9	-6.4	Contracting	Faster	2
New Orders	38.8	48.3	-9.5	Contracting	Faster	10
Production	40.8	52.1	-11.3	Contracting	From Growing	1
Employment	41.8	49.7	-7.9	Contracting	Faster	2
Supplier Deliveries	52.5	50.3	+2.2	Slowing	Faster	15
Inventories	43.4	49.3	-5.9	Contracting	Faster	3
Customers' Inventories	53.5	54.5	-1.0	Too High	Slower	2
Prices	53.5	77.0	-23.5	Increasing	Slower	21
Backlog of Orders	35.0	43.5	-8.5	Contracting	Faster	5
Exports	52.0	57.0	-5.0	Growing	Slower	70
Imports	44.0	48.5	-4.5	Contracting	Faster	8
OVERALL ECONOMY				Growing	Slower	83
Manufacturing Sector				Contracting	Faster