Timberrrrr: Manufacturing ISM At Lowest Since September 2009

Tyler Durden's picture

Yesterday we had the biggest monthly drop in the Chicago PMI since the Lehman collapse. Today, the Lehman bankruptcy is invoked again, after the critical ISM Manufacturing index plunges to 53.5, far below expectations of 57.1, and from 60.4 previously: this is the lowest number since September 2009. At this level of "growth" stall , the US economy will be in an official contraction (Sub 50) next month. From the report: "The PMI registered 53.5 percent and indicates expansion in the manufacturing sector for the 22nd consecutive month. This month's index, however, registered 6.9 percentage points below the April reading of 60.4 percent, and is the first reading below 60 percent for 2011, as well as the lowest PMI reported for the past 12 months. Slower growth in new orders and production are the primary contributors to this month's lower PMI reading. Manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April. Manufacturers continue to experience significant cost pressures from commodities and other inputs." Surprisingly, inventories declined from 53.6 to 48.7, refuting yesterday's PMI data. The only good news: Prices Paid dropped from 85.5 to 76.5. Too bad it is taking more than 15 minutes. Next up: Goldman to (i) lower NFP to 125,000 and (ii) H2 GDP to under 3%.

Charting Timberrrrrr:

And a far scarier chart: the critical ISM New Orders less Inventories, which implies an ISM of under 45%


From the respondents:

  • "Chemical prices are under increasing cost pressure, driven by feedstock and transportation costs." (Chemical Products)
  • "Continued growth through beginning of second quarter, with strong backlog and outlook for at least the next three months." (Electrical Equipment, Appliances & Components)
  • "Business levels remain strong — better than last year by 20+ percent, but not back to 2008 or early 2009 levels." (Fabricated Metal Products)
  • "Demand remains strong; however, inflation is evident everywhere in virtually every material purchased." (Paper Products)
  • "Bad weather is impacting retail business." (Printing & Related Support Activities)
  • "Business is still strong, but we are more aware of a possible softening than previously." (Machinery)

And data at a glance:


MAY 2011




PMI 53.5 60.4 -6.9 Growing Slower 22
New Orders 51.0 61.7 -10.7 Growing Slower 23
Production 54.0 63.8 -9.8 Growing Slower 24
Employment 58.2 62.7 -4.5 Growing Slower 20
Supplier Deliveries 55.7 60.2 -4.5 Slowing Slower 24
Inventories 48.7 53.6 -4.9 Contracting From Growing 1
Customers' Inventories 39.5 40.5 -1.0 Too Low Faster 26
Prices 76.5 85.5 -9.0 Increasing Slower 23
Backlog of Orders 50.5 61.0 -10.5 Growing Slower 5
Exports 55.0 62.0 -7.0 Growing Slower 23
Imports 54.5 55.5 -1.0 Growing Slower 21
OVERALL ECONOMY Growing Slower 24
Manufacturing Sector Growing Slower 22

*Number of months moving in current direction.

Full data.

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Clueless Economist's picture

I have insisted ever since I received my Nobel Prize (the President earned one also) that we need to to save or create shovel-ready jobs in order to keep the green shoots growing and to pave the road to a RECOVERY Summer.....but noone listens to me or John Maynard anymore.

Zero Debt's picture

Meanwhile the central planners are struggling to decide whether the government should subsizide the shovels to dig meaningless holes or the excavators to refill them again.

trav7777's picture

let's suppose we did all that, subsidized a bunch of tractors.

What oil are they gonna run on?  If we have human shovelers, what oil will we run the industrial agro on to feed them at a higher rate?

People would be wise to study the discontinuity that just "happened" in the early 70s.  It wasn't monetary in origin.  Raygun succeeded in extending the dollar umbrella to some important nations far away, but that game has now run out.  And here we are seeing the same symptoms...go figure.

what is happening to money is not the cause; it is a symptom. 

LRC Fan's picture

Santelli for the fucking win!  Mentions gold and oil are way up and the Fed's medicine hasn't worked!  Amen!

And if we miss big on Friday does it mean Dow -300 or more??  I think the pre-QE3 correction has begun in earnest. 


Boston's picture

Hmmm, I wonder what the 10 year is doing?  Oh, it's 2.97%.  Wow, I wonder what Bill Gross thinks about this little development?

And BTW, if NFP disappoints on Friday, I wonder how quickly the 10 year will drop below 2.9%.  Here's a hint Bill---about 3 seconds.

Johnny Lawrence's picture

Exactly.  I've said it lots of times here.  Being bearish on bonds was the most anti-contrarian position anyone could take.

taraxias's picture

and the most correct

I don't think PIMPCO is planning with the same time horizon as you


(Is Captcha keep getting harder, or is it just me?)

trav7777's picture

the need for QE3 w/o the crash...longs are lovin it

Iriestx's picture

All this bad news guarantees that we close green.

Cassandra Syndrome's picture

Tyler. Lehman's was September 2008, there was a number of ISMs in the 30s before April 2009.

Tortfeasor's picture

If only the words "monthly drop" had some sort of concrete meaning.  They are so non-specific, aren't they?

fastishplastic's picture

read more carefully - "Yesterday we had the biggest monthly drop in the Chicago PMI since the Lehman collapse." and then - after the conative jump - he writes "ISM Manufacturing index plunges to 53.5, far below expectations of 57.1, and from 60.4 previously: this is the lowest number since September 2009."  TD does seem to invoke the ISM lows of sept. 09 and the sept 08 Lehman collapse in a carefully crafted close relationship in this intro, but accurate nonetheless. And furthermore ISM was still hovering around 50 in sept 08, didn't plunge until after Lehman. that may have also been cleverly invoked?! terrible horrible very bad number in any event.



Atomizer's picture

Treasury Department Announces Public Offering of Warrants to Purchase Common Stock of Webster Financial Corporation


 The proceeds of this sale will provide an additional return to the American taxpayer from Treasury's investment in the Company beyond the dividend payments it received on the related preferred stock. The offering is expected to price through a modified Dutch auction. Deutsche Bank Securities Inc. is the sole book-running manager for this offering.

RobotTrader's picture

2.99% 10-yr. yield.

Here come the "Animal Spirits"....


lieutenantjohnchard's picture

hd at low of day: check

vz at low of day: check

mo at low of day: check

robottrader changing the subject: check

HelluvaEngineer's picture

WFC and other TBTF longs getting *blowtorched*

lieutenantjohnchard's picture

good one. blowtorched indeed. i could have added his other favorite best of breed.

jpm at low of day: check

looks like the dime he made yesterday is long gone.

gulf breeze's picture

Guess you will vanish again today after getting pumped and dumped. 

Jayda1850's picture

10 year with a 2 handle, QEIII basically assured, Steve liesman calling bad reports transitory, the euro at 1.44 with all thats going on over there. You cant make any of this shit up. And you still can not rule out a positive close in these manipulated markets. UNBELIEVABLE.

dognamedabu's picture

I am like thinking.. This house of cards is ready to collapse. So many warning signs. But it probably will hold up for a few more dates. 

Racer's picture

This is what you get when you let a Genocidal Chairsatan run the economy into the ground... the very one that didn't see the massive problems the last time until they hit him in the face

6 String's picture

Should be good enough to get the R2K to rally into the close for the day and end the week smartly positive, right?

LRC Fan's picture

Seems like good support at Dow -108 for some reason.  But yeah the markets will "pare" their losses to about -50 before noon and then begin ramping higher by 3pm.  Count on it.

Caviar Emptor's picture

We're slumping into the long, hot summer

Iriestx's picture

Summer of Recovery II:  The QE3 Boogaloo.

LRC Fan's picture

Are you some kind of terrurist or something?  This is the summer of recovery!  For real this time!  Strong king dollar is coming to a theatre near you soon!  Joe Biden said so...right Joe?  Joe??  Joe!! Wake the fuck up!

Caviar Emptor's picture

We're like the 1962 NY Mets. 

We're like Roy Hobbs (The Natural) when he's under the evil spell of Kim Basinger

apberusdisvet's picture

Wait until Geithner announces that another TARP is needed; I see that coming a mile away; or would there be a covert bailout?  In spite of the no down profit days for the TBTFs, I'm assuming that the balance sheets are worse now, what with all the foreclosure fraud implications, and the massive amounts of derivative debt overhang.

6 String's picture

...and the market get pinned at this level, of course. Anyone else notice the monkeys pinning the market action every time there is shit news? Seriously, this market is so rigged I'm not even sure ZH has covered it nearly enough it's gotten that pathetic.


Flore's picture

Time to get the deflation boogeyman out of the the closet.. which will be send back home as fast as lightning with some money printing///

Caviar Emptor's picture

Manufacturing was one of the pillars of this "recovery". 

Where did all the "robust" demand go?

Could it be that, well, there really was no big demand? Just residual stimulus money being doled out from on high as corporate welfare? Hmmmm

shortcover's picture

Tyler - Goldman already lowered the # to 100,000

oogs66's picture

How many people got long yesterday for the 1st day of month trade?  maybe that is adding some extra pressure?

6 String's picture

wait for it, wait for it....pinning complete, ramp up.

Iriestx's picture

BTFD.  PPT will kick in early and ramp this thing geen on no volume.

SilverRhino's picture

I'd say silver bitches but the goddamned spot price just fell off a cliff thank to the regularly scheduled morning raid.   Fuckers.

razorthin's picture

All eyes on xlf.  Needs to springboard off the 200 day MA.  Looks like it's starting to do that now.

SilverRhino's picture

I'd say silver bitches but the goddamned spot price just fell off a cliff thank to the regularly scheduled morning raid.   Fuckers.

lieutenantjohnchard's picture

look at the bright side. we silver holders can pick up a pocketful of coins on the (slightly) cheap.

SilverRhino's picture

Garage sales.   You'd be AMAZED at what people will sell blackened metal cups and dishes for with that little 925 / 950 mark.  

slewie the pi-rat's picture

i think it is just the daily ramp-up of the gold/silver ratio---what i now call the ratio rip: Gold to Silver Ratio - 24 Hour Live Gold to Silver Ratio Price Chart Intraday da boys @ werk! and then, the divergence closes.  now that the convention wisdom = gold goood, silver baaad, 40 is defended. 

trav7777's picture

this is why silver is the poor man's gold and you shouldn't listen to silver pumpers telling you you are going to get rich off of it.

Gold smells something coming.

Silver is an industrial commodity now, not a PM

LudwigVon's picture

Wrong. Chinese word for bank, "silver house." Not current fact nor history is on your side.