• 262 days Will The ECB Continue To Hike Rates?
  • 262 days Forbes: Aramco Remains Largest Company In The Middle East
  • 264 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 664 days Could Crypto Overtake Traditional Investment?
  • 669 days Americans Still Quitting Jobs At Record Pace
  • 671 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 674 days Is The Dollar Too Strong?
  • 674 days Big Tech Disappoints Investors on Earnings Calls
  • 675 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 677 days China Is Quietly Trying To Distance Itself From Russia
  • 677 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 681 days Crypto Investors Won Big In 2021
  • 681 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 682 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 684 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 685 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 688 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 689 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 689 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 691 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmers of Hope Extinguished

After flirting with contraction for three months, the Manufacturing ISM fell into negative territory with a 48.6 reading, below the lowest Econoday estimate of 49.7. The Econoday Consensus guess was 50.5, an improvement over the October reading of 50.1

After skirting right at the breakeven 50 line since September, ISM's manufacturing index broke below in November to 48.6 which is more than 1 point below Econoday's low-end estimate for the lowest reading since June 2009. The decline includes a significant dip for new orders which are down 4.0 points to 48.9 and the lowest reading since August 2012. At 43.0, backlog orders are in a six-month streak of contraction. With orders down, ISM's sample cut back on production, down nearly 4 points to 49.2, and cut back on inventories, down 3.5 points to 43.0. Employment firmed but remains soft at 51.3.

A convincing detail in the report is the breadth of weakness with only five of 18 industries reporting composite growth in the month. Transportation equipment, getting a boost no doubt from aircraft and motor vehicles, is among those in the plus column while the negative column includes petroleum as well as a number of capital goods industries including machinery, primary metals, and fabricated metals. Weakness in these industries points to weakness in business expectations.

Exports have been the Achilles heal [heel] of the factory sector all year. New export orders in this report held steady at 47.5 for the sixth straight sub-50 reading. Another weak detail is a second month of contraction for import orders (49.0) which are suffering their worst run in four years. Prices paid remains in deep contraction at 35.5.


Glimmers of Hope Extinguished

The ISM index came in at 50.2 last month, vs. a consensus estimate of 50.0, providing economists with glimmers of hope.

Economists then did what they normally do, which is take the prior reading and expect the next month to be better, explaining this month's consensus guess of 50.5.


ISM 2007-2015

ISM Manufacturing: PIMI
LargerImage

That was the lowest reading since June 2009. But don't worry, there's no recession warning here, just glimmers of hope.

And with that hope, let's further dive into the numbers straight from the ISM Report.

ISM Report


Key Points

  • New orders, production, PMI Index in contraction
  • Backlog of orders in contraction 6 months
  • Exports in contraction 6 months
  • Prices in contraction 13 months

There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.

 

Back to homepage

Leave a comment

Leave a comment