The Institute for Supply management, or ISM, has released some awful data for the manufacturing sector. It noted that while the overall economy grew for the 83rd consecutive month, the PMI indicates a significantly faster rate of decline in manufacturing during September. That marked a departure from the 2008 trend toward negligible growth or contraction each month. This is also the lowest level for the PMI since October 2001.
September’s prices rose at a much slower rate, as the Prices Index fellto the lowest level in 21 months. Export orders continued to increase,but at a slower rate than in August.
The manufacturing index gave a reading of 43.5, down from 49.9 inAugust. 50.0 is traditionally the benchmark of even with less than 50being contraction and above 50 representing growth. The drop in priceswas huge at 53.5 versus 77.0 in August.
To make matters worse, new orders fell nearly 10 points to 38.8 versus48.3 in August. Backlog of Orders also fell to 35.0 from 43.5 inAugust. Employment also fell to 21.8 from 49.7 in August. New ExportOrders fell to 52.0 from 57.0.
Besides the falling prices being good for the public, the only goodnews seen in this for manufacturers is that Inventories fell to 43.4from 49.3. At least manufacturers won’t have to wait to burn throughmassive inventories before they can turn the machines back on afterthings pick up.
This has helped to take almost another 100 points off of the DJIA to10,651.86 in the 12 minutes since this report. The pain continues.
Jon C. Ogg
October 1, 2008
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