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ISM mfr’g contracts in June

Posted By Peter Boockvar On July 2, 2012 @ 12:25 pm In MacroNotes,Think Tank | Comments Disabled

For the first time since July ’09, ISM mfr’g fell below 50 at 49.7, under expectations of 52.0 and down from 53.5 in May. After rising to the highest since April ’11 in May at 60.1, New Orders dropped sharply to 47.8, the weakest since April ’09. Backlogs fell 2.5 pts to 44.5 and Production dropped to 51 from 55.6. Inventories at the mfr’g level fell 2 pts but were up 5 pts at the customer level with both remaining below 50. Employment fell only modestly to 56.6 from 56.9. Importantly and likely a main reason for the broad weakness was the 6 pt drop in Export Orders to 47.5, the lowest since April ’09. Prices Paid, following the sharp drop in commodity prices, were down by 10 pts to 37, also the lowest since April ’09. Of the 18 industries surveyed, 7 reported growth and 9 contraction with the balance seeing little change. The ISM summed up the report with vague commentary saying “Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China.” Bottom line, the economic ills of Europe and China are now showing up on the shores of a fragile US economy.


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