Thursday, October 2, 2008

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