Worse than it appears–a quick look at the US Manufacturing ISM PMI.

A third month below 50 suggests the manufacturing sector is struggling, but the survey’s composition methodology may be hiding a deeper decline.

In the last recession, the headline ISM PMI did not fall below 50 for 3 consecutive months until April 2008, and it is doing just that now.

The two components keeping up the main index are inventories and supplier deliveries, although the biggest boost came from inventories (up to 53 from 49 in July and 44 in June): a rise in inventories would normally be considered a good thing, but at this stage of the cycle, given the weak and uncertain global economic conditions, this could be a  preamble to a far steeper decline. 

The new orders component is at its lowest level since March 2009.

Leave a Reply