Manufacturing ISM Down 5th Month to Lowest Since June 2009


The US manufacturing slump continues unabated. Unlike the dip in 2015, this isn't energy related.

The December 2019 Manufacturing ISM® Report On Business® paints another grim picture of the state of US manufacturing.

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ISM Key Details

  • The December PMI® registered 47.2 percent, a decrease of 0.9 percentage point from the November reading of 48.1 percent. This is the PMI®'s lowest reading since June 2009, when it registered 46.3 percent. The PMI is down for the fifth month and at a faster rate.
  • The New Orders Index registered 46.8 percent, a decrease of 0.4 percentage point from the November reading of 47.2 percent. New Orders are down for the fifth month and at a faster rate.
  • The Production Index registered 43.2 percent, down 5.9 percentage points compared to the November reading of 49.1 percent. Production is down for the fifth month and at a faster rate.
  • The Backlog of Orders Index registered 43.3 percent, up 0.3 percentage point compared to the November reading of 43 percent. The order backlog is down for the eighth month.
  • The Employment Index registered 45.1 percent, a 1.5-percentage point decrease from the November reading of 46.6 percent. Employment is down for the fifth month and at a faster rate.

15 of 18 Industries in Contraction

  • Three Gaining: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products.
  • Fifteen Contracting: Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Nonmetallic Mineral Products; Paper Products; Fabricated Metal Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Textile Mills; Primary Metals; Chemical Products; Plastics & Rubber Products; and Machinery.

Consensus Outlook

The Econoday consensus expected a bounce from 48.1 to a slower contraction at 49.1.

Instead, things worsened despite the End of the GM Strike in October.

On December 17, I commented Industrial Production Rebounds after GM Strike Ends.

Manufacturing production is still 2.3% below the peak level reached in December of 2007. (Index levels 108.59 vs 106.09). This production and the associated jobs simply are not coming back.

Looking Ahead

The current rebound is artificial, but so is the strike that preceded it. Looking ahead, Boeing is going to have a significant impact in the first quarter.

Thousands of jobs and possibly as much as 1/3 of a point of GDP as Boeing Will Suspend 737 Max Production in January.

Trump Impact

GM is back but Boeing has gone the other way. And what is the demand for cars going to be?

Trump did not cause the GM strike or the fiasco at Boeing, but his inept tariff policy and trade war with China are starting to bite.

Don't expect Trump's deal with China to fix anything.

In the Trade Lie of the Day Kudlow made the claim "US Exports to China Will Double". Here's a hint, they won't.

It's important to note Trump's Amazing Trade Deal: Details a Complete Mystery.

Parts of the deal are classified information. Shhhh.

Much Ado Over Nothing

Trump says the trade deal will be signed on January 15.

It won't do much of anything, except of course to get Trump to brag about the greatest deal in history.

Mike "Mish" Shedlock

Comments (1)
No. 1-1
Tony Bennett
Tony Bennett

"Unlike the dip in 2015, this isn't energy related."



And unlike 2015, I don't expect China to come the rescue with a massive credit driven stimulus.

Factset 2 weeks ago:

Earnings Growth: For Q4 2019, the estimated earnings decline for the S&P 500 is -1.4%. If -1.4% is the actual decline for the quarter, it will mark the first time the index has reported four straight quarters of year-over-year earnings declines since Q3 2015 through Q2 2016.

Earnings Revisions: On September 30, the estimated earnings growth rate for Q4 2019 was 2.5%. All eleven sectors have lower growth rates today (compared to September 30) due to downward revisions to EPS estimates.

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