Manufacturing in U.S. Contracts at Fastest Pace Since 2009

[mahatmakanejeeves]

Source: Bloomberg Business

by Victoria Stilwell

December 1, 2015 — 10:00 AM EST Updated on December 1, 2015 — 11:01 AM EST

Manufacturing in the U.S. unexpectedly contracted in November at the fastest pace since the last recession as elevated inventories led to cutbacks in orders and production.

The Institute for Supply Management’s index dropped to 48.6, the lowest level since June 2009, from 50.1 in October, a report from the Tempe, Arizona-based group showed Tuesday. The November figure was weaker than the most pessimistic forecast in a Bloomberg survey. Readings less than 50 indicate contraction.

The report showed factories believed their customers continued to have too many goods on hand, indicating it will take time for orders and production to stabilize. Manufacturers, which account for almost 12 percent of the economy, are also battling weak global demand, an appreciating dollar and less capital spending in the energy sector.



“It’s the perfect storm for manufacturing,” said Brett Ryan, a U.S. economist at Deutsche Bank Securities Inc. in New York, whose forecast was among the closest in the Bloomberg survey. “Traditionally, the manufacturing sector has been the canary in the coal mine when it comes to slowing growth. To what extent does this bleed over into other sectors of the economy -- that’s yet to be seen.”

Read more: http://www.bloomberg.com/news/articles/2015-12-01/manufacturing-in-u-s-unexpectedly-shrinks-most-since-june-2009

[fasttense]

1. Just more former US jobs and factories shipped to near slave wage countries is all.

Nothing to worry about...free trade....free trade.....globalization... globalization... This is no indication of the US's continued economic spiral downwards.

When did Thom Hartmann say he believed the next crash was coming???

[mtasselin]

5. 2016

I know you know the answer is 2016 if you have not read that book I would highly K & R it. In fact listening to Thom right now.

[fasttense]

9. Yeah you're right

I was being sarcastic.

I try to listen to him every week day.

[valerief]

2. What does manufacturing in the U.S. mean?

Owners of U.S. manufacturing companies get contracts and the work is shipped offshore?

[closeupready]

3. Uh, huh? I'm not seeing what the headline claims.

I'm seeing a decline but there've been plenty of steeper drops since 2009 - I mean, if you are customizing the time examined, then I suppose you can see anything you want.

[Igel]

4. "to lowest level"

Looks like the headline doesn't match the text.



Lots of claims rely on customized, arbitrary time intervals. (Granted, all reporting intervals are arbitrary but some are also conventional.)

[closeupready]

6. Ah, okay, right I see - I think they see the current level lower than since 2009,

and then they jump to stating the pace of decline is fastest since 2009. Kind of irresponsible that the editors let that slip, but oh well.

On edit, or wait! Is this chart a measure of pace, itself? Then I think maybe I was mistaken. That is, if this chart is an index of the pace of manufacturing expansion, then ...

But wait, even then, the current index number doesn't mean ... well, I'm just confusing myself, so I'll bow out here.

[mahatmakanejeeves]

7. I see what you (and others) are saying.

There appear to be two month-to-month drops in 2011 with steeper slopes. That is, the pace would be quicker.

If Bloomberg had said "The index is at its lowest point since 2009," there would be no argument, though we came close at the end of 2012.

Don't be surprised if they edit the headline to make their point clear.

Thanks for writing.

[whatthehey]

8. I might quibble with that quibble

DISCLAIMER - I am a respondent to this ISM survey but have no special expertise in its analysis or construcyion beyond the basics.

But the point I can make with confidence is that the metric itself IS a rate. That number isn't the level of manufacturing activity but a measure of whether orders, backlog, inventory, deliveries, employment and whatnot for future manufacturing are trending up (50+) or trending down (<50) with the rate of growth or decline steepening as you move away from the midpoint.

So the lowest number on the chart in fact does mean a faster rate of decline.


However it's worth noting that this decline is far from dramatic. If I see a few months of <45 then I will worry.

[Myrina]

10. " ... as elevated inventories led to cutbacks in orders and production ... "

That's what happens when your workers can't afford to buy the products they manufacture ....

[Jimbo S]

11. I work in manufacturing

I see a couple of early red flags. Should be interesting to see what six months from now brings.