The ISM index is down 14 straight months, new orders down for 16 straight months, but production ticked into positive territory in December.
Please consider the December 2023 Manufacturing ISM® Report On Business® emphasis mine.
The U.S. manufacturing sector contracted in December, as the Manufacturing PMI® registered 47.4 percent in December, up 0.7 percentage point compared to November’s reading of 46.7 percent. “This is the 14th month of contraction. Four out of the five subindexes that directly factor into the Manufacturing PMI® are in contraction territory, down from all five in November. The New Orders Index logged its 16th month in contraction territory at a faster rate in December. Of the six biggest manufacturing industries, none registered growth in December,” says Timothy R. Fiore, Chair of the Institute for Supply Management®. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting.
A Manufacturing PMI® above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the December Manufacturing PMI® indicates the overall economy contracted for a third straight month after one month of growth preceded by nine consecutive months of contraction and 30 months of expansion from June 2020 to November 2022. “The past relationship between the Manufacturing PMI® and the overall economy indicates that the December reading (47.4 percent) corresponds to a change of minus-0.5 percent in real gross domestic product (GDP) on an annualized basis,” says Fiore.
“None of the six biggest manufacturing industries registered growth in December. Demand remains soft, and production execution is stable compared to November, as panelists’ companies continue to manage outputs, material inputs and labor costs. Suppliers continue to have capacity. Eighty-four percent of manufacturing gross domestic product (GDP) contracted in December, up from 65 percent in November.
More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 48 percent in December, compared to 54 percent in November and 35 percent in October. Among the top six industries by contribution to manufacturing GDP, three (Machinery; Petroleum & Coal Products; and Computer & Electronic Products) had a PMI® at or below 45 percent, the same number as the previous month,” says Fiore.
My Thoughts
- The numbers are skewed by the UAW strike and it ending.
- Overall, the report is weak but not abysmal.
- Despite the strike ending, employment is down for the third month.
- The backlog of orders surged six points but is still below 50. With backlogs and new orders negative for 15 and 15 months respectively, manufacturing employment rates to be weak.
Government, Social Assistance and Health Are Booming
Manufacturing isn’t booming but the welfare state sure is, especially in the sanctuary states.
For discussion, please see Government + Social Assistance and Health Is Over 100% of Job Creation in 3 States
In New York, Illinois, and Michigan, Government jobs plus Social Assistance/Health Care is over 100% of year-over-year job creation.
In Oregon, New Jersey, and California, Government jobs plus Social Assistance/Health Care is between 61% and 89% of year-over-year job creation.
See the above link for more discussion.
“Government, Social Assistance and Health are booming”
VERY WELL SAID Mish 👏👏
This fraud ends really badly
I would have to agree with the numbers being skewed by the UAW strike, but we ain’t seen nothing yet! I think the deal made/forced by the Unions was only an OK deal “IF” the EV Market went crazy along with the hype and foreplay by the MSM, Union Leaders, and Politicians.
The Deal was a horrible/no-win for the Union Workers, who really don’t and for the most part, have never had a say in things. They just pay the dues, work and rinse;repeat, trying to make it through life as best they can like most Americans.
Despite the strike ending, employment is still down and I think it will remain down for quite sometime yet. Maybe a few years even.
We are entering a recession, or so some would say (I would) we have been in one for awhile now, so this is all expected as far as I can tell. The data points to this occurring, as does the word on the street. The only hype I see is coming from Biden Inc. Via Bidenomics, but we all know that’s a bunch of hogwash.
Spot On: Manufacturing isn’t booming but the welfare state sure is, especially in the sanctuary states. > For Now… These Cities are going to crash HARD IMO!
What A Tangled Web They Weave…
T
Why in the world does BLS lump social assistance jobs with health care jobs?
To hide a surge in nonsense social assistance jobs in a forest of productive health care jobs?
Is the production category a statistical anomaly? It doesn’t make sense with backlog contraction improving, and new orders contracting more.
SPY [1M] : The trend is up. Dec is half Nov size on higher vol. SPY might be backing up on Jan 2022 high. SPY reached DM #13. Refueling expected
SPY [1W] : SPY flipped on Oct 30. In order to move up there must be a close above Dec 18 high. Breaching it isn’t good enough. Today close is above Dec 18 low.
SPY [1D] : The trend is down. In order to move up, at least for a while, today close must be above yesterday low.
Confused : of course !
It’s not a good sign that rates are up this early in January. The seasonal inflection point is liable to come early.
“You’re gonna need a bigger Federal Deficit.”
2 $Trillion ain’t what it used to be.
“Government, Social Assistance and Health are booming”
What a wonderful economy!!! Not the least bit juiced by play money!
Welfare is booming until the money from manufacturing and domestic sales and foreign exports runs out.
Arms manufacturing is keeping things relatively good….LOL