ISM PMI suggests that US manufacturing contracted in June2 July, 2012, 22:37. Posted by Zarathustra
The ISM manufacturing report shows that the US manufacturing is contracting.
PMI for June fell from 53.5 to 49.7, below the 50 mark, signalling contraction in manufacturing. The market was expecting 52. This is the first sub-50 reading since the recovery.
Two data points for the internal components of the PMI are particularly interesting. New Orders fell off the cliff from 60.1 to 47.8, which is also the first sub-50 reading since the recovery, suggesting quite a sharp reversal from expansion to contraction. Also, prices component fell from 47.5 to 37.0, the lowest reading since the recovery, suggesting that there is no inflationary pressure to speak of.
Thanks to falling inventory, the new orders minus inventory measure, while fell significantly, remained in positive territory.
Source: ISM, FRED
This, to us, appears to be the first major set of data points from the US which is truly disappointing while the rest of the world has been slowing quite dramatically over the past year or so. It is yet to be seen if this is just a blip or a turning point, but if this is indeed a turning point, this just shows that the US ultimately cannot be decoupled from the rest of the world.