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 |
Mike “Mish” Shedlock
So when will economics become a science?
As soon as central banks and reporting agencies quit manipulating the economy. I don’t think the market could find its own ass with a flashlight and a tennis racquet right now.
If I go to the library to get an economics book, should I look in the fiction section?
Of course not, silly. You look in the Religion section.
ha ha, same place I find the AGW books.
The ISM is another useless survey like the University of Michigan Consumer Confidence. Garbage in, garbage out.
Final Results for August 2016
Next data release: September 16, 2016 for Preliminary September data at 10am ET Surveys of Consumers chief economist, Richard Curtin
Confidence eased back in late August to register a trivial decline from the July reading. Less favorable personal financial prospects were largely offset by a slight improvement in the outlook for the overall economy. Most of the weakness in personal finances was among younger households who cited higher expenses than anticipated as well as slightly smaller expected income gains. Importantly, long term inflation expectations fell to the lowest level ever recorded, with near term inflation expectations anchored to that same low level. Just as low inflation has provided strong support for real income gains, low interest rates have increasingly become the sole driver of large discretionary expenditures. Although consumers increasingly expect a Clinton victory, consumers remained nearly equally split on which candidate would actually improve overall economic conditions or their own personal finances. Overall, the data remains consistent with real personal consumption improving by 2.6% through mid 2017, with large purchases sensitive to future interest rate trends.
I have felt for some time that the people who produce these reports “Lean on the Data” to make the Obama admin look good, or anyway better. After the Justice Dept. & FBI Hillary scandal, I don’t trust anything the Feds put out. As for Bloomberg, wasn’t he a possible Democrat Candidate? Just listen too these Fed POBAHs chatter! They have NO connection reality. But they DO have connection to Obama & Hillary. I really fear for the VOTE tally in the next election. There is NOTHING that theObama Admin. has not corrupted! Don’t expect the Media to expose them.
Robby
DHS is taking over US pres. election operations. Unprecedented. No vote in Congress.
Where’s the outrage? This election may be stolen in broad daylight because americans are willingly blindfolded.
Let’s see, Obama and many of his friends came from Chicago.
There has never been any vote fraud in democrat machine Chicago, has there?
Wait a minute; isn’t that where the phrase “vote early and vote often” came from?
A giant South Korean shipping freight carrier just filed for bankruptcy. Another sign that world trade isn’t going so well.
Huge miss.
Feels like ’07. Look out below…
Costco announced sales today.
USA Comp sales growth was 0% for the last 16 Weeks through August 31st.
Let’s remember that most Costco shoppers have middle class jobs or better.
Those numbers are more reliable, imo, than the Government numbers.
You cannot separate economics from politics. They have always been linked.
Thus, economics can never be a science in the traditional sense no matter how many mathematical models economists construct.
The only question is: “Is economics a subset of political science or is political science a subset of economics?”
Politics is a pathological subset of economics.