The top chart shows the composite manufacturing index, which has printed readings below 50 for the last two months. The bottom charts shows the new orders index, which has also printed below 50 for the lats two months.
Consider the following anecdotal points from the latest ISM report:
"Business has been up for the last seven consecutive months — strong customer orders coming in." (Machinery)
"Automotive demand remains strong." (Fabricated Metal Products)
"Resin pricing has bottomed out so customer orders have increased; it was pent-up demand." (Plastics & Rubber Products)
"We have noticed a marked slowing in business overall. [We] have confirmed this with other companies in our industry as well." (Wood Products)
"Forecasts remain high, but actual bookings remain flat." (Computer & Electronic Products)
"Taking a conservative approach to spending including hiring, travel and inventory. U.S. economy seems stuck — at best — with little to no growth." (Apparel, Leather & Allied Products)
"Business remains surprisingly strong." (Primary Metals)
"Continued slowdown in government military sector spending in advance of the presidential elections has seriously impacted business performance." (Transportation Equipment)
"Business is softening, requiring some down production days." (Furniture & Related Products)
"General state of business this month is flat, with increasing economic uncertainty." (Chemical Products)
I've emboldened the comments that talk about weakening business -- of which there are five points.
From the latest Beige Book:
The picture in manufacturing was mixed. The Boston, Chicago, Kansas City and San Francisco Districts reported increasing demand and sales since the previous Beige Book, although the improvement was generally small and uneven, with two of these four Districts reporting that demand growth, while positive, was slowing. Six Districts reported that demand for manufactured goods was actually falling, although none reported a dramatic fall. The outlook was somewhat more positive, with six Districts reporting that manufacturers expected increasing demand and only two reporting the opposite.
Other regional reports are also showing weakness. Consider the latest Empire State index:
The August Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated over the month. The general business conditions index slipped below zero for the first time since October 2011, falling thirteen points to -5.9. At -5.5, the new orders index was below zero for a second consecutive month, and the shipments index fell six points to 4.1. The prices paid index climbed nine points to 16.5, pointing to a pickup in the pace of increase in input prices, while the prices received index hovered just above zero for a third consecutive month. The index for number of employees inched lower, but remained positive at 16.5, suggesting a moderate increase in employment levels, and the average workweek index rose to 3.5. Indexes for the six-month outlook were generally positive but lower than in July, indicating that respondents expected business conditions to improve little in the months ahead.
We see a similar set of facts in the Philadelphia survey:
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased 6 points, to a reading of -7.1. This marks the fourth consecutive negative reading for the index but also its highest reading since May (see Chart). Nearly 30 percent of firms reported declines in activity this month, exceeding the 22 percent that reported increases. Indexes for new orders and shipments remained negative. The new orders index improved one point, while the shipments index fell 3 points.
Richmond is experiencing a similar slowdown:
In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — gained eight points to −9 from July's reading of −17. Among the index's components, shipments increased twenty-four points to 1, new orders picked up five points to end at −20, and the jobs index moved down six points to −5.
Most other indicators also suggested some easing in the pace of recent weakness. The index for capacity utilization picked up seven points to −9, and the backlogs of orders edged up two points to −25. Additionally, the delivery times index added one point to −4, while our gauges for inventories were mixed in August. The raw materials inventory index was virtually unchanged at 24, while the finished goods inventory index fell three points to end at 18.
