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Timberrrrr: Manufacturing ISM At Lowest Since September 2009
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:
| MANUFACTURING AT A GLANCE MAY 2011 |
||||||
|---|---|---|---|---|---|---|
|
Index |
Series Index May |
Series Index April |
Percentage Point Change |
Direction |
Rate of Change |
Trend* (Months) |
| 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.
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jISM Bitchez
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.
Suck it up, Bernanke
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.
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.
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.
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.
Exactly. I've said it lots of times here. Being bearish on bonds was the most anti-contrarian position anyone could take.
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?)
the need for QE3 w/o the crash...longs are lovin it
All this bad news guarantees that we close green.
Tyler. Lehman's was September 2008, there was a number of ISMs in the 30s before April 2009.
Ditto, you beat me to it.
If only the words "monthly drop" had some sort of concrete meaning. They are so non-specific, aren't they?
Funny!
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.
http://www.ism.ws/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=18598
Treasury Department Announces Public Offering of Warrants to Purchase Common Stock of Webster Financial Corporation
http://www.treasury.gov/press-center/press-releases/Pages/tg1196.aspx
2.99% 10-yr. yield.
Here come the "Animal Spirits"....
LOL....
hd at low of day: check
vz at low of day: check
mo at low of day: check
robottrader changing the subject: check
WFC and other TBTF longs getting *blowtorched*
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.
All short etf being dry humped
Guess you will vanish again today after getting pumped and dumped.
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.
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.
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
Should be good enough to get the R2K to rally into the close for the day and end the week smartly positive, right?
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.
We're slumping into the long, hot summer
Summer of Recovery II: The QE3 Boogaloo.
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!
We're like the 1962 NY Mets.
We're like Roy Hobbs (The Natural) when he's under the evil spell of Kim Basinger
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.
QE-infinity
...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.
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///
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
Tyler - Goldman already lowered the # to 100,000
How many people got long yesterday for the 1st day of month trade? maybe that is adding some extra pressure?
wait for it, wait for it....pinning complete, ramp up.
BTFD. PPT will kick in early and ramp this thing geen on no volume.
I'd say silver bitches but the goddamned spot price just fell off a cliff thank to the regularly scheduled morning raid. Fuckers.
All eyes on xlf. Needs to springboard off the 200 day MA. Looks like it's starting to do that now.
dup
I'd say silver bitches but the goddamned spot price just fell off a cliff thank to the regularly scheduled morning raid. Fuckers.
look at the bright side. we silver holders can pick up a pocketful of coins on the (slightly) cheap.
Garage sales. You'd be AMAZED at what people will sell blackened metal cups and dishes for with that little 925 / 950 mark.
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.
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
Wrong. Chinese word for bank, "silver house." Not current fact nor history is on your side.
CIBC remains positive about the economy by virtue of this reading still being above 50.
Next month it will be below 50, Mr CIBC.
CIBC ? Not heard of them ? Perhaps a typo from CNBC on the news feed.
Canadian Imperial Bank of Commerce
Someone remind me when the recession ended again......bueller.....bueller?
December 12, 2012
Thanks that made me laugh.
An optimist. Are you taking advice from HoboBaiter?
OK. We had our post-recession manufacturing "boom".
Turned out we had to sell this stuff to people without money
Is anyone surprised? This should of been priced in, but QE2 didn't allow that re-pricing.
Just BTFD and tell your friends to do the same
Green sharts.
Bernanke is stuck between his liquidity trap and the string he's been pushing on.
"And a far scarier chart: the critical ISM New Orders less Inventories, which implies an ISM of under 45%"
This reminds me of a zero hedge story I read the other day. Something about goldman saying the order and inventory data was kind of I don't know. A big steaming pile of lies.
I am feeling a little better about hanging out in cash in my spec accounts right now. Gold move up might be real this time though. It seems to be slowly evolving into a risk off asset. However some sustained contraction will solve that. Bennie won't start qe3 anytime soon. Maybe never.
point of recognition is being achieved that everything is risk. Gold can be shoved around a bit by paper, but it is bedrock anti-risk.
Watch the USG burn through all the pension funds, writing IOUs to them like they do SS (public pension fund seizure), and there is no point in changing the ceiling. They have magically "found" more revenues.
At the end, every single stinking account will be filled with IOUs from a bankrupt sovereign.
tyler's precis, as per the actual report, includes 1 bad weather excuse and nada re: japan. prices are still increasing for the commodities, with a bit of relief for copper & steel, which were reported increasing and decreasing (by diff respondents, we would hope).
i think maybe the japan influence is going from: we can't get parts.
to: we can't get orders.
New Orders 51.0 61.7 -10.7Backlog of Orders
50.5
61.0
-10.5
June 2008 redux. (Stocks declined 50% in 9 months) The economy is WEAK beyond belief. It's time for stocks to price in some reality.. not "QE" but REAL Declines in Economic activity and Earnings.
The Fed spent 2 TRILLION and we have .0050% growth. Not a resounding success.
Housing declining... Chk
Unemployment on the Rise again... Chk
Inflation for Food and Energy..Chk
Lack of Savings... Chk
Endless Wars... Chk
Loss of personal Freedoms... Chk
GMent Motor Sales Decline... Chk
Radiation and Oil in the Air and Seas...Chk
Setting the stage for rev....?
8 to 12 trillion, if one includes TARP, TALF, QE & the backstopping and guarantees on existing collateralized and non-collateralized debt obligations, but your point remains salient and correct.
The really important question here that nobody seems to be asking is what is this going to do to Obama's chance for reelection?
It's irrelevant. The same schmoes from one party or the other will be put in place until people wake up.
What is even worse is that Sarah Palin is still in the running. That should tell you all you need to know.
Pretty low if we are heading into recession.
Were declining from a Higher level in the ISM also compared to 07-08, we had a fast move up , followed by a Steep drop to come.