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ISM Drops to Lowest Level Since May 2020, New Orders Plunge Into Contraction

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15 comments on ISM Drops to Lowest Level Since May 2020, New Orders Plunge Into Contraction

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ISM table and synopsis by permission.

Please consider the Manufacturing ISM® Report On Business® for September 2022.

Manufacturing PMI® Details

  • “The September Manufacturing PMI® registered 50.9 percent, 1.9 percentage points lower than the 52.8 percent recorded in August.  
  • The Manufacturing PMI® figure is the lowest since May 2020, when it registered 43.5 percent. 
  • The New Orders Index returned to contraction territory at 47.1 percent, 4.2 percentage points lower than the 51.3 percent recorded in August. 
  • The Production Index reading of 50.6 percent is a 0.2-percentage point increase compared to August’s figure of 50.4 percent. 
  • The Prices Index registered 51.7 percent, down 0.8 percentage point compared to the August figure of 52.5 percent. This is the index’s lowest reading since June 2020 (51.3 percent). 
  • The Backlog of Orders Index registered 50.9 percent, 2.1 percentage points lower than the August reading of 53 percent. 
  • After a single month of expansion, the Employment Index contracted at 48.7 percent, 5.5 percentage points lower than the 54.2 percent recorded in August.
  •  The Supplier Deliveries Index reading of 52.4 percent is 2.7 percentage points lower than the August figure of 55.1 percent. This is the index’s lowest reading since before the coronavirus pandemic (52.2 percent in December 2019). 
  • The Inventories Index registered 55.5 percent, 2.4 percentage points higher than the August reading of 53.1 percent. 
  • The New Export Orders Index contracted at 47.8 percent, down 1.6 percentage points compared to August’s figure of 49.4 percent. This is the index’s lowest reading since June 2020, when it registered 47.6 percent. 
  • The Imports Index remained in expansion territory at 52.6 percent, 0.1 percentage point above the August reading of 52.5 percent.”

Very Weak Report

Production, order backlogs, even prices are on the verge of contraction. This was a very weak report.

The Bloomberg Econoday consensus was 52.4 in a range of 51.0 to 53.0. 

GDPNow Impact

On September 30, I noted GDPNow for the 3rd Quarter Surges Following Strong Trade, Inventory, and Income Reports

It’s not the data that matters to GDPNow. Rather, it’s the data vs what the model expected. 

I highly doubt the GDPNow model expected a huge contraction in construction spending or this weak ISM report, both this morning.

For additional details, please see Construction Spending Unexpectedly Dives 0.7 Percent in August With Negative Revisions

This post originated at MishTalk.Com.

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15 Comments
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alovicious
alovicious
3 years ago
The notion that there’s some big “reshoring wave” underway that will buoy US manufacuting is an illusion that is very easy to dispel.
Very simply, if you make stuff you need capital goods. If there were some big reindustrialization push underway – you’d expect to see US imports of capital goods surging.
There’s certainly an uptick, but a 25% gain over two years can’t really be considered a surge. And we already know that the August trade figures included a sharp drop in the imports of capital goods. The “reshoring boom” – such as it was – may already be in the rearview mirror.
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Salmo Trutta
Salmo Trutta
3 years ago
“On Sept. 28, around noon, the Bank of England stepped (back) into the gilt markets and started buying government bonds with longer maturities to stop the collapse in their value”
That’s what the 1966 Interest Rate Adjustment Act did.
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vanderlyn
vanderlyn
3 years ago
inflation still here. no where close to recession. though the main stream business folks on bloomberg radio and cnbc……….and news all are panting for recession so fed stops. we had zirp for 15 years……….and only 2022 some rate hikes. sorry guys, this is post ww2 style inflation. jobs tight and good times ahead for savers. not even stagflation which i thought for first half of 2022. it’s really a great set up and recovery from world wide shut down……….
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KidHorn
KidHorn
3 years ago
Reply to  vanderlyn
Keep drinking the kool aid.
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vanderlyn
vanderlyn
3 years ago
Reply to  KidHorn
ok pal. i will. mish was dead wrong about slow down. he’s great at real estate analysis, but his macro economics calls have been dead wrong. look at shadow stats plum here. you are welcome old sport.
SHADOW STATS. “August 2022 Money Supply growth suggested no inflation relief. Amidst a continuing and intensifying 52-year peak flight to liquidity in August 2022, Basic Money Supply (Currency plus Demand Deposits) — the best leading indicator of money-driven inflation — surged anew to an unprecedented 122.1% of its pre-Pandemic level, up from July’s 114.4% reading, up 12.7% year-to-year in August from 10.4% in July, while the broader money measures M2 and M3 began to stagnate. The Monetary Base increased as previously estimated by ShadowStats in August, although it appears to have pulled back some in September and a similar early assessment of that series, with a decline in Bank Reserves, nonetheless with another historic high level for Currency in Circulation.
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Matt3
Matt3
3 years ago
Reply to  vanderlyn
Good times ahead. Interesting point of view. I don’t understand what you are telling us with respect to the Shadow Stats. Can you please explain?
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vanderlyn
vanderlyn
3 years ago
Reply to  Matt3
go to shadowstats.com and read as much as you want…………they deserve a nobel prize for their decades efforts.
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Tony Bennett
Tony Bennett
3 years ago
Reply to  vanderlyn
Anyone referencing Shadow Stats – for anything – lacks credibility.
Having said that … look what your source wrote 2 paragraphs above your snippet:
“the First- and Second-Quarter 2022 consecutive Real GDP, GDI and GNP quarterly contractions all held in place, with minimal change in magnitude, still showing the onset of what should gain formal recognition as a “new” Recession.”
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vanderlyn
vanderlyn
3 years ago
Reply to  Tony Bennett
whatever pal. i’ve made lots of money using their information. i think you lack cred for anything, too. nah nah nah nah nah. you old sport made my day. thanks for the LOL
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Salmo Trutta
Salmo Trutta
3 years ago
Reply to  vanderlyn
re: “Basic Money Supply (Currency plus Demand Deposits) — the best leading indicator of money-driven inflation”
Shadow stats has that right. And inflation remains too high.
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TheBigRoastBeefFrog
TheBigRoastBeefFrog
3 years ago
What is up with CS?
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Tony Bennett
Tony Bennett
3 years ago
“Production, order backlogs, even prices are on the verge of contraction. This was a very weak report.”
…
(imo) the final nail in consumer will be heating costs sticker shock.
Looking forward to Wednesday when EIA resumes updates.
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JackWebb
JackWebb
3 years ago
Reply to  Tony Bennett
Definitely true on the heating side. Now’s the time when oil and propane tanks are getting filled. A whole lot of people are going to be looking at serious sticker shock in October. What was for us a $450 refill will now be $800. That’s propane, and it hasn’t gone up as much as diesel, which is what heating oil is.
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Northeaster
Northeaster
3 years ago
Reply to  JackWebb
National Grid already publicly announced a 61% increase for customers in MA.
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KidHorn
KidHorn
3 years ago
Reply to  Northeaster
Glad I have heat pump that gets electricity from a fossil fuel burning plant.
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