ISM: September manufacturing data disappoint; market sells off

The September 2009 Manufacturing ISM Report On Business showed the manufacturing sector and economy expanding.  But no matter, the markets wanted more. Equities sold off in a major way today. We’re talking over 200 points on the Dow and 65 points on the Nasdaq. On the other hand, Treasuries rallied and the yield on the 10-year is now down to 3.19%. As I told you selling equities and buying treasuries was a good idea two weeks ago, I think this move has further to run.

Looking at the actual data, things were not terribly bad. The index fell modestly from 52.9 to 52.6. But it was the trend which was dubious. Notice the highlights in red.

The PMI is down. And the major components, new orders, production and employment, are all going the wrong way. Not good.

What does this tell us?  Not a whole lot, really. I did note that the inventory purge is proceeding less slowly, which will help GDP but still has me wondering if there’s more to the resurgence in manufacturing than inventories. But, it’s just one month’s data. In isolation, it’s meaningless.  However, if we see the same pattern next month, you should be asking yourself where this recovery is headed.

Source

Manufacturing ISM Report On Business – ISM website