In yet another grievous blow to the MAGA economy, ISM manufacturing fell into contraction territory in August, a development many observers feared, but economists failed to bake in despite clear signs of economic deceleration stateside.
The gauge printed 49.1 for August, missing consensus (51.3) by a country mile and coming in below the most pessimistic estimate from 65 economists surveyed (the range was 49.5-52.5).
It was the lowest reading since January of 2016.
The breakdown is bad. New orders dipped into contraction, sinking to 47.2 (the lowest in seven years), while employment, deliveries, export orders and imports all fell.
The news comes just one business day after the final read on University of Michigan consumer sentiment showed confidence falling to the lowest levels of the Trump era. The following visual is not good news for the president.
In a note out last week, BofA set about determining whether politicians are correct to assume that the economy will make or break their bid for a second term. The bank’s David Woo looked at consumer confidence, the unemployment rate and ISM manufacturing.
“It turns out that when a president is reelected, at least two of the three indicators are showing improvement”, Woo wrote, concluding that “these results show economic success is paramount to the chances for reelection”.
Now, both consumer sentiment and ISM are in the gutter.
We’ll get the August jobs report on Friday and you’re reminded that the trend is not Donald Trump’s friend there either (see bottom pane below), although the labor market is still in good health.
One imagines Trump will read a few headlines about Tuesday’s ISM print – and then proceed directly to blaming it on the Fed and demanding rate cuts.