‘Greatest Economy In History’ Weirdly Spits Out Worst ISM Manufacturing Number In A Decade

Those hoping for a rebound in ISM manufacturing after August’s contractionary print were disappointed on Tuesday – and “bigly”.

The closely-watched gauge of factory activity printed just 47.8 for September. That missed every estimate from 69 economists. The range was 48.2 to 52.

It’s the lowest read since June of 2009, and would appear to cast still more doubt on the notion that the US economy is “the greatest in the history of our country”, as Donald Trump declared, on Saturday.

Employment fell to 46.3, the lowest read since January of 2016, while supplier deliveries, inventories and backlogs all declined.

New export orders printed 41. “Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019″, ISM’s Timothy Fiore said. “Overall, sentiment this month remains cautious regarding near-term growth”.

As a reminder, the final read on September University of Michigan sentiment showed Americans are now back to being terrified of “tariff” man.

The trade war has knee-capped manufacturing sentiment abroad, and the latest ISM numbers are the latest evidence that the US is no longer immune now that the fiscal impulse has waned and the tax cut sugar high has worn off.

Of the 18 manufacturing industries surveyed, only three reported growth in September. The commentary is not inspiring. To wit:

• “Chinese tariffs going up are hurting our business. Most of the materials are not made in the U.S. and made only in China.” (Food, Beverage & Tobacco Products)
• “General market is slowing even more than a normal fourth-quarter slowdown.” (Fabricated Metal Products)
• “Demand softening on some product lines, backlogs have reduced, and dealer inventories are growing.” (Machinery)
• “Business has been flat for us. Year-over-year growth has slowed dramatically.” (Miscellaneous Manufacturing)
• “We have seen a reduction in sales orders and, therefore, a lower demand for products we order. We have also reduced our workforce by 10 percent.” (Plastics & Rubber Products)
• “Incoming sales are sluggish for this time of year.” (Furniture & Related Products)

This is just about the last thing the White House needs at a time when poll after poll suggests Americans are losing confidence in the president’s handling of the economy. Trump continues to parrot a (largely false) narrative about an economic renaissance in the US, and that story is expected to be the cornerstone of his 2020 campaign, assuming there is a 2020 campaign.

Some high profile names – including Jeff Gundlach – have warned that if the economy rolls over and Trump can’t rescue it by ending the trade war, the president may not even run for a second term.

An NBC/WSJ poll released in August showed support for free trade hitting an all-time high, perhaps suggesting the quixotic effort to rewrite the rules of global trade and commerce is starting to backfire.

A few weeks later, a Quinnipiac Poll found 37% saying the US economy is getting worse, versus just 31% who say it’s improving. It was the first time since the election that more Americans believe the economy is getting worse than getting better. In another first, the same poll showed Americans think Trump’s policies are doing more harm than good.

Tuesday’s ISM data is especially disappointing considering the IHS Markit survey was relatively upbeat.

All that’s missing now is a poor read on the services sector later this week and a big payrolls miss on Friday to cement the recession narrative.

We’ll leave you with some humor…

“The U.S. Economy is the envy of the world, as Europe and Asia slide ever toward recession. But the Left is trying to avoid talking about the Trump Economy.” @IngrahamAngle The Best Is Yet To Come.

— Donald J. Trump (@realDonaldTrump) September 20, 2019

How do you impeach a President who has created the greatest Economy in the history of our Country, entirely rebuilt our Military into the most powerful it has ever been, Cut Record Taxes & Regulations, fixed the VA & gotten Choice for our Vets (after 45 years), & so much more?…

— Donald J. Trump (@realDonaldTrump) September 28, 2019