US Manufacturing Crashes Into Contraction In August, Election Uncertainty Blamed

Tyler Durden's picture

Following China's rising (official) and tumbling (Caixin) PMI data overnight, US Manufacturing prints this morning were both weak. PMI modestly disappointed, dropping from July's 52.9 and August's preliminary 52.1 to 52.0 final with new orders and employment sliding. Markit's explanation is simple: "there's anecdotal evidence to suggest that this at least in part reflects a slowing in the economy in the lead up to the presidential election." We guess productivity has been declining for the same reason for the last 9 months? ISM had already rolled over in July, and August's collapse (from 52.6 to a contractionary 49.4) has erased the dead cat bounce hopes of Q2. Across the board, ISM factors deteriorated with new orders plunging.

Dead cat bounce is dead again...


The ISM breakdown...

New Orders plunged... to the lowest sicne Dec 2015


Maunfacturing Employment tumbled...(suggesting another decline in manufacturing payrolls tomorrow)

ISM respondents seem oddly encouraged?

"We have been getting lots of inquiries, but not a lot of sales order placements." (Chemical Products)


"Business was flat this month overall." (Computer & Electronic Products)


"Continued strong market demand for our products related to construction." (Nonmetallic Mineral Products)


"Commercial construction continues to be strong, and therefore our business is very good." (Fabricated Metal Products)


"New product distribution is increasing." (Food, Beverage & Tobacco Products)


"This past month, sales increased over the trend from the first half of the year. There seems to be a general, albeit slight, loosening of capital purse strings." (Machinery)


"Medical device is still strong." (Miscellaneous Manufacturing)


"Business conditions are generally flat." (Transportation Equipment)


"Hard to find production associates. Unemployment in the area is around 4 percent. Can’t get enough employees [which] leads to lots of overtime." (Plastics & Rubber Products)


"Oil prices continue to seek a ‘footing’; rig count slowly increasing." (Petroleum & Coal Products)

Commenting on the final PMI data, Chris Williamson, Chief Economist at Markit said:

“Despite the PMI falling in August, the survey suggests the third quarter is shaping up to be the best quarter so far this year for manufacturing, with output growth picking up compared to the first half of the year on the back of improved export sales.


“The overall rate of expansion remains only modest, however, and the upturn fragile. Weak domestic demand remains a drag on order books. Concerns about the outlook have also resulted in a marked reduction in the rate of job creation.


“There’s anecdotal evidence to suggest that this at least in part reflects a slowing in the economy in the lead up to the presidential election, meaning there’s scope for growth to revive later in the year. In the meantime, the overall sluggish pace of expansion signalled by the survey, and the slacking of inflationary pressures, provides support to those arguing that interest rates should remain on hold.”

Charts: Bloomberg

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kliguy38's picture

Guess who will be blamed for the market crashing........TRUMP

Manthong's picture

For sure, whether Trump or Hellery gets in will make all the difference in the world as to whether or not the country needs more cans of shaving cream or rolls of toilet tissue.

Well, maybe more rolls of toilet paper, but the demand will go up, not down.

pods's picture

When they cannot massage away declines they have to offer up Strawmen.

This might hold if it were deciding to expand your plant due to possible tax implications, but come on.  

I have another idea:

Doesn't manufacturing usually drop during a Depression?


Mr Pink's picture

Uncertainty??? This election was decided at the Bilderberg meeting in 2008

GUS100CORRINA's picture

Let's take a look at who is really responsible for economic MESS!!!!

Most Americans have never seen a Trillion Dollars visually and let alone understand what it really means. So let's review the financial accomplishments of America under the current FED and DEMOCRATIC executive branch leadership. The list below should give additional insight to just how sick America's financial system truly is today.

1.) Student Loan Debt - 2 Trillion

2.) America's debt - UP over 100% in 8 years,

3.) America's unfunded liabilities - 150 Trillion plus and climbing rapidly

4.) Corporate Debt - Up over 100% in 8 years.

5.) Bank Derivative Expsosure - Up over 300% in 8 years.

6.) Crime and Violence - Out of Control (Billions in Lost Property, Lives)

7.) America's foreign policy - America now pays ransom to terrorist states like Iran (400,000,000)

8.) State and Municiple Pension Shortfall - 6 Trillion

9.) Fed Balance Sheet - At 4.5 Trillion - Up Over 400% in 8 years. Recently, Ms. Janet Yellen has told the markets that another 4 Trillion will be needed if future economic shock should occur!!!!!

10.) CBO has recently reported that 6.5 Trillion cannot be accounted for in the government books!!!! 


Well done FED and Mr. Preseident ... Well done!!!

WE ARE ON THE TITANIC AND WE HAVE HIT THE ICEBERG and everyone is more interested in straightening up the deck chairs!!!

Is it any wonder why the economic health of America is SICK!!! TRUTH IS TREASON IN AN EMPIRE OF LIES!!!!

American leadership for the most part are made up of despots with reprobate minds who are under the influence of the 'wicked one'.

May America R.I.P.

My vote: We need to start over with new leaders who have an absolute moral foundation. We need a man like George Washington. But until then, TRUMP/PENCE will have to do. GOD forbid that Hillary Clinton ever sees the light of day in this election.




WOW101's picture

No, it is just the weather.....

Nexus789's picture

I think the US has hit the iceberg, reversed and rammed it a few more times to make sure a clamity ensues.

UndertheDRADIS's picture

Of course. Trump is white, male, and ostensibly Christian. The Trifecta.

E.F. Mutton's picture

Who makes up these "excuses?" - Eddie Haskell? Tommy Flanagan from SNL?

oddy's picture

Yeah, it's never the Marxists in Washington. It's always the weather or something.

MFL8240's picture

Election to blame?  ahahahahaha!  fucking media makes me sick

NotApplicable's picture

Well, it's not like these transcriptionists have the ability to understand complex concepts such as debt-fueled over-capacity.

Shit, I'd guess there's at least 20 years of inventory sitting in everyone's basements/garages/storage units, so who needs anything else produced?

All we need is a bigger eBay.

Garage-sale nation, I tell ya.

gr26's picture

great news for stock market. 

StackShinyStuff's picture

Market?  We ain't got no steenking market!

SomethingSomethingDarkSide's picture

Definitely not caused by the fact that inneficient business models that are unproductive on a massive scale in not serving societal needs are being supported unilaterally over those that would like to start up and compete.

Don't mention the fact that consumers have less purchasing power than they did 40 years ago and are drowning in debt and inflating currency.

Nope, it's all "Trump's Fault"!


Infield_Fly's picture
Infield_Fly (not verified) Sep 1, 2016 9:16 AM

My finger smells - I blame that.

cognitive dissident's picture

yeah, THAT'S what it is to blame... or instead perhaps borrowing the next 30 yrs of productivity for the last 20 years.

DNC panics in 3, 2, 1 ...

starman's picture

The fed casino has a membership so if you ain't in it F off!


Father ¢hristmas's picture

How to force Mexico to pay for the wall:

Threaten to cut off security aid, ban remittances to them, and stall and rescind new and existing visas, respectively.

Then build the wall yourself on your side of the border anyway.

silverer's picture

"Election uncertainty". Wow. So it has nothing to do with the policies of the Federal government or the private Federal Reserve over the last ten years? Government leaders are EXPERTS at fixing blame on things you can't see, feel, or sue.

King Tut's picture
King Tut (not verified) Sep 1, 2016 10:02 AM

Pay people a good wage and they will work- this $11 bucks an hour shit just won't cut it

Consuelo's picture



$40/hour should do it.


An Escalade in every pot...





Boubou's picture

What uncertainty?