And so we have recoupling, with the ISM printing below 50 (i.e. contraction) at 49.7 for the first time since July 2009. Expectations of a 52.5 print were obviously blown away, as the final number came well below the lowest Wall Street forecast of 50.5. Prices plunge to 37 on expectation of 57 and there go your corporate margins; Employment down from 56.9 to 56.6, and New Orders implode from 60.1 to 47.8. Epic disaster which proves that no, decoupling, does not exist and now puts the Fed back in play, which however, with the S&P just shy of 2012 highs, can do didley squat.
PMI drops to a contractionary state for the first time since July 2009 with its biggest miss since July 2011.
and the Prices Paid sub-index tumbled to April 2009 levels...
From the respondents;
- "Business is still strong, with some nagging question whether it will be sustained." (Machinery)
- "The economy and general business seem to be getting better even though recent data say otherwise." (Fabricated Metal Products)
- "Significant raw materials price correction underway." (Plastics & Rubber Products)
- "Local labor market shows no signs of slowing down. Competition for technical services/skilled craft remains tight." (Petroleum & Coal Products)
- "Overall demand signals from sales forecast are trending down in all regions." (Computer & Electronic Products)
- "Although our shipments are up year over year and from prior month, we can feel some head winds, especially from Europe. We are watching our expenses very tightly and being cautious." (Apparel, Leather & Allied Products)
- "Business continues to exceed forecast in all markets." (Primary Metals)
- "Economy seems to be slowing slightly due to concerns in Europe; however, production has not changed a great deal." (Transportation Equipment)
- "Business has started to show signs of slowing." (Furniture & Related Products)
- "Slowing world economies, particularly China, are reducing 3Q and later orders and drastically dropping some raw material prices." (Chemical Products)