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.


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

ISM 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

Mike “Mish” Shedlock