ISM manufacturing index falls to lowest level in 2 years

Markit Economics and the Institute of Supply Management (ISM) will release their purchasing manager’s indexes (PMI) at 9:45 a.m. and 10:00 a.m. ET respectively. Still, it is 33 straight months of growth.

Of the 18 manufacturing industries surveyed last month, only seven reported growth, led by printing and textile mills, while the other 11 reported contraction.

Economists forecast Markit’s index at 53.0, unchanged from August, and ISM’s index at 50.6, down from 51.1 in the prior month. Still, we would view these reports as being mixed if you just look at them at face value for growth versus contraction.

The new orders sub-index fell to 50.1 from 51.7 to mark the lowest level since November 2012.

The inventories Index registered 48.5 points, the same as in August, indicating that raw materials inventories contracted for the third consecutive month. “There is a few concern and uncertainty in the comments of the report, with the Fed keeping us guessing about interest rates, China is worrisome, and general uncertainty of economic direction”.

Barclays analyst Jesse Hurwitz noted the PMI was now down to a two-year low. “I am optimistic about future growth, and I think manufacturing is ready for that”.