Widget Image
Follow PPD Social Media
Connect With PPD
Saturday, October 19, 2019
HomeNewsEconomyISM Manufacturing Index (PMI) Falls to Lowest Level Since January 2016

ISM Manufacturing Index (PMI) Falls to Lowest Level Since January 2016

Manufacturing industry production concept, depicting factory production on a conveyor belt with factory operational workers in uniform. (Photo: AdobeStock)

Manufacturing Contracted in August Amid U.S.-China Trade Fears

Manufacturing industry production concept, depicting factory production on a conveyor belt with factory operational workers in uniform. (Photo: AdobeStock)
Manufacturing industry production concept, depicting factory production on a conveyor belt with factory operational workers in uniform. (Photo: AdobeStock)

The Institute for Supply Management (ISM) Manufacturing Index (PMI) declined to 49.1, down from 51.2 in July. That’s below the consensus forecast and the lowest level since January 2016, when the PMI registered at 48.

PriorConsensus ForecastForecast RangeActual
ISM Manufacturing Index (PMI)51.2 51.3 50.5  to 53.0 49.1 

This is the first monthly contraction for the PMI since August 2016, when it registered at 49.6. This ends a 35-month expansion period, during which the composite index averaged 56.5%.

“Respondents expressed slightly more concern about U.S.-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders,” Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee, said.

“Respondents continued to note supply chain adjustments as a result of moving manufacturing from China,” he added. “Overall, sentiment this month declined and reached its lowest level in 2019.”

However, while the reading will fuel recent media cheerleading for a recession, it is far from supported by historical data.

A PMI above 42.9% over a prolonged period of time generally indicates an expansion of the U.S. economy. As a result, the dip in the August PMI still indicates growth for the 124th consecutive month in the overall economy.

The past relationship between the PMI and the overall economy indicates that the PMI for August (49.1%) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis,” Mr. Fiore noted.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

No comments

leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.