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ISM Biggest Miss Since January: Orders Tumble, Employment Slides, Backlogs Contract, Construction Spending Negative
So much for the string of near record ISM prints. Oh... and the recovery too.
As we had been warning all along looking at the unadjusted data (because for some reason surveys need a seasonal adjustment), US manufacturing was actually far weaker than expected. And sure enough, moments ago the ISM confirmed what we had been saying all along when it reported that the headline PMI dropped fromm 59.0 to only 56.6 which was the biggest miss since January, with the all important New Orders tumbling from 66.7 to only 60.0 and the unadjusted print matching the lowest since March, Employment sliding from 58.1 to 54.6, and Backlogs dropping back into contraction from 52.5 to 47.0. So much for the subprime autoloan driven renaissance: it appears that whoever could buy a Government Motors car with a 550 FICO, already has. And now...what?
Charted:
The breakdown:
From the report:
"The September PMI® registered 56.6 percent, a decrease of 2.4 percentage points from August’s reading of 59 percent, indicating continued expansion in manufacturing. The New Orders Index registered 60 percent, a decrease of 6.7 percentage points from the 66.7 percent reading in August, indicating growth in new orders for the 16th consecutive month. The Production Index registered 64.6 percent, 0.1 percentage point above the August reading of 64.5 percent. The Employment Index grew for the 15th consecutive month, registering 54.6 percent, a decrease of 3.5 percentage points below the August reading of 58.1 percent. Inventories of raw materials registered 51.5 percent, a decrease of 0.5 percentage point from the August reading of 52 percent, indicating growth in inventories for the second consecutive month. Comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest."
The pereptually cheery cheery-picked, goalseeked respondents are still as cheerful as ever:
- "Business seems to be picking-up as fuel prices drop. More disposable income at the C store level where many of our products are sold." (Food, Beverage & Tobacco Products)
- "Warehouse and multi-family construction seems to be continuing strong." (Fabricated Metal Products)
- "World political unrest is creating additional defense requirements." (Transportation Equipment)
- "We are seeing shipments up, year-over-year, in the 8 to10 percent range for last couple of months. This is good." (Apparel, Leather & Allied Products)
- "Seen an increase in sales due to government fiscal year-end." (Computer & Electronic Products)
- "Demand is pretty good overall. Freight continues to be a major issue." (Chemical Products)
- "Things are a bit slower than the first half." (Printing & Related Support Activities)
- "Outlook is very good. Demand seems to be growing." (Paper Products)
- "Our search continues for good machinists and electrical engineers." (Machinery)
- "Overall, orders are at the strongest point this year." (Miscellaneous Manufacturing)
... someone didn't give them the memo, the same one where we warned that Non-Seasoanlly Adjusted New Orders were leading the way all along:
And in other news, US construction spending contracted 0.8%, its 2nd biggest drop in almost 2 years, drastically missing expectations of a 0.4% gain. July's gains were revised lower to +1.2% 9from +1.8%) and private non-residential construction fell 1.4% as residential construction also contracted.
Don't worry though: the Fed has a whopping $10 billion left in its POMO goodie bag for the entire month of October (and then nothing) to make it all better.
Time to start pricing in the untaper yet?
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And Ebola, human sacrifice, cats & dogs living together..
http://www.youtube.com/watch?v=JmzuRXLzqKk
And the "dollar weakness" while the Euro and Yen both devalue means US exporters are thrilled ... right?
Horse manure.
I keep thinking about Regans rolling recession ... gone global.
I didn't buy it then and I don't now.
Buy the dip?
Screw'em
Once again ZH has it wrong. Doomberg clearly states that this "cooling" of manufacturing is just what industry needs to "settle" into this "expansion".
Manufacturing in U.S. Cools as Factories Settle Into More Sustainable Expansion
See when you read it like that it sounds so much bettergooderer.
Would that be like the Titanic settling on the ocean floor ?
Would that be like an Ebola victim's body temperature stabilizing at room temperature?
It was the OLYMPIC for the third time damnit!!
Now where's my scotch glass...
nevermind
It's all that pent up demand...
I know what you think it means, sonny. To me, it's just a made up word. A politician's word, so young fellas like yourself can wear a suit and a tie, and have a job. [/Red]
Buzzy the word was rehabilitation. I've seen Shawshank about 150 times. So what exactly do you mean- that ISM like every other government number is nothing but a a bullshit report/word/figure?
So what's the next rabbit for the Fed to pull from its sideways fitting baseball cap? 40 or 50 year mortgages to pump the housing market for another 5 or 10 years? Just like the auto market, it's all about the payment, not the price.
What, you mean I have to pay on this car loan? Dats racsis U be pickin on me cause I be blk.
Why do you think that Obama took over the student loan sector? "Hey, just-graduated kiddies without jobs, living in your parent's basements... I'll make that middle class working family go without food and pay your loan for you is you vote for me. Signed, Dear Leader."
Too bad ADP didn't know this before they released their overly optimistic, reversion back to the mean, employment numbers.
Missed it by that much.....
Tylers- I think it's a good that you keep putting the seasonally adjusted data up against the non-seasonally adjusted. This should be mandatory in EVERY ZH ARTICLE involving seasonally-adjusted numbers. But most especially "survey results", since I can think of no legitimate statistical reason to seasonally adjust them.
Were we to only use 12 month rolling averages, we can eliminate the need for seasonal adjustments altogether.
Only then, the results would be much harder to manipulate.
There is nothing magical about the time frames they have arbitrarily selected to tell us results. But as we know, most businesses adjust as they go, not because it is the first of the month, or the first of the quarter.
Step back and look at a slightly larger time frame, get rid of the seasonal adjustments, and see the picture that emerges.
It's not pretty.
No one, absolutely no one, could have guessed this!
Construction spending (august) just out
disaster
consensus ... +0.5%
actual ... -0.8%
BUT
it gets "better" ... july was revised down quite a bit ... if no revision to july ... actual would have plunged -2.1%
oh, and for good measure
june revised even further lower ... from -0.9% to -1.6%
Remember this:
PROFIT = SELL PRICE - COST
IF no profit, then businesses reduce output, fire people, reduce hours of work or simply shut down
That is how I forecast what is going to happen down the road
Hypothetical question.
How do you make profit in a Barter economy?
Excellent question.
You can't.
The community will invent local money to measure up barter imbalances
And that is exactly how money comes into existence.
Money = Trade Imbalance = Debt/Credit (whether fiat or gold or silver or seashells)
If all trade is balanced, hence barter, then money need NOT to exist
Excellent, excellent question
So someone making a profit basically means someone else taking a loss or getting shafted, technically speaking?
And Money just facilitates and quantifies that profit/loss.
Fiat money even more so?
No.
Profit = surplus of real outout
That surplus is either sold or lent out when the buyer of surplus has no money but has cash flow to pay
ermmm... I was not talking about a production scenario but a strictly trading scenario.
You mean FX trading?
Yes. In an financial trading scenario, it's a zero sum game
it is gambling
Not sure if I am failing to explain or you avoiding to understand but let me put it this way.
In a barter economy:
1 chicken = 1 meter of cloth.
So a poultry farmer can exchange 10 chickens for 10 meters. He can at anytime trade the cloth back for the chickens. Same when quantified in seashells or silver even.
Or, 1 chicken = 1 hour of certain manual labour, also = 1 meter of cloth.
Where and what is the profit in that?
Is that what Mario refers to as Price stabeletee :)
So, I have 10 chicken and you have 5 meters of cloth
Market is price is 1 chicken = 1 meter of cloth
I give you 10 chicken, you give me 5 meters of cloth and piece of paper with signature that you PROMISE me to pay 5 other meters of cloth 3 months from now at 5% interest (hence 5% more cloth)
THAT IS MONEY, THAT IS PROFIT
I overproduced because I TRUST you. If I didn't trust you, then we'd be doing 100% barter, not 50% barter plus PROMISE
It is not a zero sum game. Overproduction is expanded continuously based on TRUST that other party will pay with REAL GOODS/SERVICES.
Oh, ofcourse the "interest" which is the actual profit. I like the way you think :)
But you are overcomplicating it. You had 10 chickens and I had 10 meters of cloth, then?
Anyway, nevermind.
It's not possible to have the exact quantity of real output for all people
There is always trade imbalance, hence existence of money
Communism tried to do that, control means of production and exact output
it collapsed
The trade imbalance is in your head. Example: I trade you my golf club for your lays-boy.
Who wins in that trade? If you really want my old golf club and it only cost you an old recliner do you win or do i win because i no longer play golf. See winning is in your head.
Now if you dont want my golf club but you think you can trade it for something else you may want from another, then i win you but you lose untill you make an alternate trade, then you win.
Money is used to control how you think and to control prices of things.
I am explaining how the world works and why money exists.
Nothing to do with my head
This is how reality works
How the world now works is instead of my old golf club buying your lounger it now buys your house. Money not only robs you it robs me with false expectations of value.
Slapping prices on things only makes the producer of money happy. Because it is they who decide what is and is not of value to you. Its all in your head.
Thank you bud.
I was thinking if I was the only one who thought like that.
That is what I was trying to get at, but ekm1 was like a slippery eel and he already brought in Communism into the argument and had I continued would have definitely invoked Godwin's Law.
One can have money to maintain a ledger of any trade imbalances, but such money should be issued by mutual agreement by the seller and the buyer, not a third party with no skin in the game and moral hazard to the max.
well if you need something a heck of a lot more than the guy needs the stuff you gave in trade I consider it a profit.. or if the Value of the items is mismatched in your favor... then again if you are hoping for a future trade, that might not be a good idea..
Which is what I said above; for someone to make profit someone else has to get shafted for desperation or whatever reasons. but ekm1 thinks otherwise.
Which also explains why businesses lay off people and cut salaries to enhance profits, when raising the price is not possible.
read my answer
PROFIT = PRODUCT SELL PRICE - COST PRICE + IPO COMPANY STOCK - BONUSSES + BAILOUTS
That is not real output. Hence people get laid off.
People think, or are made to think, that when banks and financial institutions collapse the world will plunge into chaos.
Infact, without the banks and high finance people will get wealthy and there will be abundance of produce and free time.
Maybe not so many iPhones with GoPros.
I gotta remember that one!!!!!!!!
Very good!
Expect the massive orders for Ebola treatments to push everything to positive, and make Sorros much, much richer.
Does this mean that the price of houses in NoVa will drop to affordable levels now? I've been waiting for 14 months and they are still climbing...
And the GM numbers showed days on the lot up to 82....60 is normal I think..so they are way overstocked....
Go to any car lot; channel stuffing is alive and well. They even have cars parked on the grassy medians and interior sidewalks.
It's a good thing we're in 'recovery'
If we recover anymore,the economy will be ready for burial.
Just that last bowel evacuation to deal with first.
Jeffrey Saut - paging Jeffrey Saut...!!!
you mean wreckovery?
"Change you can believe"!
Bullish!!
Youngman
They look at it this way. WE have lots of inventory to chose from so come in and get the car of your dreams.
All while everyone is all-in fully leveraged....hey good luck being the first out the escape door muppets, you're gonna need it!
"Don't worry though: the Fed has a whopping $10 billion left in its POMO goodie bag for the entire month of October (and then nothing) to make it all better."
It is time for Super Kevin H. to rescue us all...
The ruse is over....why do you think they're importing Ebola...
The globalists, the CFR and Washington D.C. killed IBM. Nobody wants to be spied on. What are they stupid.
Please... These numbers are generated by a monkey throwing darts at a dart board.
If monkeys were doing it, the'd be a lot more accurate.
These are being generated to mislead us on purpose.
It's the majority they are trying to fool, not he minority of us that know to question what does not seem to fit reality.
its thjose damm leafs changing color, damm you leafs(yelling at tree)
Looks like a death roll over to me.