‘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…

https://twitter.com/realdonaldtrump/status/1174878305415323649

https://twitter.com/realdonaldtrump/status/1178067055226052609


 

Leave a Reply to therealheisenbergCancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

6 thoughts on “‘Greatest Economy In History’ Weirdly Spits Out Worst ISM Manufacturing Number In A Decade

  1. So if he believes impeachment is a real threat to his continuing in office, does Trump:

    1) sign a BS trade agreement with China and hope to boost the US economy in order to get reelected and buy more time to cover his crimes?

    OR

    2) continue to tank the economies of Russia’s two biggest rivals and hope somehow his overlord comrades can save him?

  2. FuriousA on #1 I don’t think he’ll ever have enough time to cover his crimes because the crimes seem to be increasing.

    on #2 You think he’ll be able to retire to the Trump Dacha outside Moscow? And play golf with the oligarchs?

  3. Working on ways @ FRED to show Fed reserves or activity as it relates to GDP growth (or decay). The concept that “real” QE did very little to stimulate “real” growth may have to be weighed against the nebulous concept of stability, so what is stability, beyond the idea that corrupt junk corporations were bailed out and allowed to have a second chance to fleece taxpayers? What economic benefit was obtained by saving failed banks and companies that literally took their stimulus and invested it into more benefits for insider pirates? Thus, how will a new series of QE steps provide growth that is tangible and sustainable … maybe sustainable isn’t a real function but what return can be quantified? As a society don’t we want more than just sustained corruption and ineptitude, e.g., MAGA as a baseline for total bullshit and corruption, which a small group of people support, because either they’re corrupt or really F’ing stupid????

    https://fred.stlouisfed.org/graph/?g=p2i6

NEWSROOM crewneck & prints