Manufacturing ISM Misses, Third Month In Contraction Territory; Biggest Miss In Construction Spending In One Year

Tyler Durden's picture

So much for the transitory bounce in positive economic reports from August. While hopes were high that maybe, just maybe, the virtuous cycle has once again been restored and the Fed's intervention would be unneeded, the August Manufacturing ISM just printed at 49.6, down from July's 49.8, and well below expectations of 50. This was the third contraction in a row, and fourth sequential miss to expectations, and joins the global PMI which as we reported yesterday now has 80% of the world in contractionary territory. The kicker was the Prices Paid category which soared to 54.0 from 39.5, a whopping 14.5 surge, which together with the always hollow Inventories category which rose from 49.0 to 53.0, and Employment, which dipped from 52.0 to 51.6, were the only categories in the 50+ region. Everything else is now contracting.

Big miss in construction spending...

And in other news, Construction spending (remember "housing has bottomed") plunged from 0.4% to -0.9%, on expectations of an unchanged print, which was the biggest miss in a year, and the biggest drop in also a year.

The last two months have seen inventories rise their largest in 27 months!!


and Prices Paid jumped notably - beating expectations by the most in 18 months...

From the report:

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 49.6 percent, a decrease of 0.2 percentage point from July's reading of 49.8 percent, indicating contraction in the manufacturing sector for the third consecutive month. This is also the lowest reading for the PMI™ since July 2009. The New Orders Index registered 47.1 percent, a decrease of 0.9 percentage point from July, indicating contraction in new orders for the third consecutive month. The Production Index registered 47.2 percent, a decrease of 4.1 percentage points and indicating contraction in production for the first time since May 2009. The Employment Index remained in growth territory at 51.6 percent, but registered its lowest reading since November 2009 when the Employment Index registered 51 percent. The Prices Index increased 14.5 percentage points from its July reading to 54 percent. Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies."




Of the 18 manufacturing industries, eight are reporting growth in August in the following order: Printing & Related Support Activities; Primary Metals; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Apparel, Leather & Allied Products; Paper Products; Chemical Products; and Miscellaneous Manufacturing. The eight industries reporting contraction in August — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; and Machinery.

Finally, per John Lohman, the Orders less Inventory leading indicator confirms much more pain is coming:

The always informative respondents are bearish to quite bearish across the board:

  • "Internal indicators and feedback from sales channels are indicating a slowdown in demand for capital equipment." (Machinery)
  • "Business continues to be very solid, but there is now a slowing of incoming orders." (Fabricated Metal Products)
  • "Incoming orders have slowed somewhat, but indications are that there will be a stronger fourth quarter." (Plastics & Rubber Products)
  • "Business is slow right now. Companies seem to be holding onto their money." (Computer & Electronic Products)
  • "We can sense, feel and see headwinds with customer orders, especially Europe related." (Apparel, Leather & Allied Products)
  • "New orders and backlog remain flat." (Miscellaneous Manufacturing)
  • "Auto industry slowing a bit in the second half [of the year]." (Transportation Equipment)
  • "U.S. drought severely impacting raw materials prices." (Food, Beverage & Tobacco Products)
  • "Lackluster demand continues in all regions of the world, and is supporting much lower raw materials prices in the second half of 2012." (Chemical Products)

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GetZeeGold's picture



Missed it. By jiiiiiiiiiiist much.


JPM Hater001's picture

Here comes 13000 boys and girls.

GetZeeGold's picture



Pick a number......any number.


Cassandra Syndrome's picture

By the way, WTF is manufacturing? I remember that name from some time long ago.....

GetZeeGold's picture



It's when you actually build China does.


GeezerGeek's picture

Or when you manufacture the BLS does.

vast-dom's picture

yeah unemployment weak housing not to worry nothing a little or a lot of QE can't solve. fucking joke.

Zero Govt's picture

Quite right, QE is manufacturing now

it's so easy this economics thing, we never needed an industrial revolution, we should have just made lots of paper money in our caves like the Fed

why won't the Fed let us all have printers then?

rubearish10's picture

Welcome back to work and welcome back to reality! Gold Bitchez!

gatorengineer's picture

When Benny dont print, you dont want to be a short term holder......  Long term cool -- Short term look for $1600 before $1725.....

nowhereman's picture

Gawd, I wish I had $1600 to spare, this living hand to mouth is killing me.

Cult_of_Reason's picture

But, but, but CNBC LiesMan and Cramer said all is well because Bernanke will print.

Conrad Murray's picture

16 Jun 2009 - Cramer: Housing Has Officially Bottomed
10 Jan 2012 - Cramer: Housing Has Bottomed

GlomarHabu's picture



Old WS saying.." Those who pick bottoms only get stinky fingers"

Meesohaawnee's picture

fleecman still wiping the dried jizz from his face from bernake

NewWorldOrange's picture

The hell of it is, most of the data just released will be "revised" in a week or two and will actually be even worse. SOP. But the algos are likely to BTFD, so we'll probably be green by the end of the day. Rally on!

francis_sawyer's picture

brick by brick the empire is being dismantled by paper pushing fucknuts...

LawsofPhysics's picture

"fucknuts", please, give credit where credit is due.

Non Passaran's picture

20 min From now buying will commence and we'll see a long upward sloping green line... By 2pm indexes will be positive...

I am short and hoping for the opposite...

JPM Hater001's picture

20 minutes from now smart money will have had a 19 minute head start.

pods's picture

And the smarter money thinks in terms of microseconds.

But the smartest money of all is nowhere near the casino.


GlomarHabu's picture



And the moon is made of green cheese

nowhereman's picture

The very fact that you are playing their game speaks volumes about your IQ

Non Passaran's picture

Your comment speaks even more about your IQ.


slewie the pi-rat's picture

now_here_man :> he didn't say he was playing this game

he may be simply writing about it

you may have more intel about his activities around what he is writing about

give us a link to a comment where he says he actually trades this for example...

even so, you may be right or right and wrong (even people who test well make mistakes, do they not?) but at least you would have scored a point in mjy book

robertocarlos's picture

But housing is up 3.8% year over year.

nmewn's picture

Stocks seem unimpressed...we need a rumor to tighten this puppy up stat!!!

JPM Hater001's picture

Rumor: Stalin and Ava Braun had a secret love child and its name is Janet Napolitano...discuss amoungst yourselves.

NewWorldOrange's picture

"we need a rumor to tighten this puppy up stat!"

No doubt Reuters and Bloomberg will come up with some headlines to feed the algos. DOW down 75 points now. I doubt it'll be down that much by 4pm. More likely to be green from an overdose of Fed Hopium.

Abraxas's picture

Manufacturing ISM Misses. Is this good for the new Economy, or is it bad?

dingoj's picture

Bad figures => QE => bullish

Good figures => better economy => bullish

ECB buys bonds => Europe is saved => bullish

Spain bank run => Spain requests bailout => bullish

Gee, is there any place left for some real bad shit to happen?

Abraxas's picture

Thanks dingoj, as you answered my question above.

viahj's picture

exponential population growth fuled by cheap energy and a debt based monetary system leads to only one thing. 

all this is merely a desperate attempt to prolong the ride while the "insiders" steal every asset they can.  NOT ONE thing has been fixed!  there will be no attempt to FIX anything, just kick the can until "something" happens leaving the global 99.99% to fend for themselves against tyrannical governments while the 0.01% flee to their enclaves.

bullish is a short term, reality will prevail.  prepare accordingly.

rubearish10's picture

-.5%, ok that's enough. Deploy BOTS!

LawsofPhysics's picture

Who knew being long commodites of real value and short paper promises and fiat could have made for such a great summer ending?

Thanks ZH.

"Unexpected" by the MSM of course.

slaughterer's picture

Enjoy your commodity longs while they last.  Because they are not going to last.  

Jlmadyson's picture

Recovery summer is back.

Get to work Benny boy!

Printing will cure this, right?

Dr Paul Krugman's picture

As Mr Durden has written previously, we need to stimulate the flow of funds.  We should now implement a new large purchase asset program to continue onward to prosperity and growth.  Bernanke is being hampered by politics - this is a first for the Neo-Classical Fed.  It is also a shame.  Bernenake, a Dr of the science of economics, should ignore the rhetoric and follow his mandate: lower unemployment so to stimulate growth.

Everybodys All American's picture

So many examples of your thesis working Europe.

Dr Paul Krugman's picture

Europe has not implemented the right programs thusfar, nor have they spent enough money to fix their problems.  Just as the case here, they have let politics get in the way of economics.

GlomarHabu's picture



Folks, observe  ignorance on display. Must be EBS (Empty Brain Syndrome) or COS (Can of Shit)

Reminds me of Howard Beale in "Network" .... "they'll tell you any shit you wanna hear"

JPM Hater001's picture

"Bernenake, a Dr of the science of economics"

I have a speech for you to read called "The Pretense of Knowledge."

Dr Paul Krugman's picture

von Hayek was a fringe thinker.