The Institute for Supply Management U.S. manufacturing index plunged last month by the most since October 2008, a fresh sign of deceleration in the economy amid global strains across the sector. The Dow Jones and other major stock indexes, already down sharply on Apple (AAPL), tumbled to fresh lows on the ISM manufacturing index.
XThe ISM manufacturing index tumbled 5.2 points to a two-year low of 54.1, missing all estimates in Bloomberg's survey. All five main components declined, led by new orders slumping the most in almost five years and the steepest slide for production since early 2012. Employment, delivery and inventory gauges fell.
The index compiled from a survey of manufacturers has tumbled sharply from a 14-year high in August, though it remains above the 50 dividing line between expansion and contraction. The 5.2- point drop from the prior month has been exceeded just twice this century, both times during recessions: in the financial crisis a decade ago and following the Sept. 11, 2001, terror attack.
Such weakness adds to signs that President Donald Trump trade wars and a fading lift from fiscal stimulus are weighing on American producers. Previous reports showed five Federal Reserve regional manufacturing gauges declined in December, the first time they've fallen in unison since May 2016.
China Weakness
Signs of trade-related spillovers in the world's largest economies and other export-oriented nations are multiplying.
China's official factory gauge has fallen into contractionary territory, and a global manufacturing index from JPMorgan Chase and IHS Markit dropped to the lowest level since September 2016. Late Wednesday, Apple cut its revenue outlook for the first time in almost two decades, citing weaker demand in China.
ISM Manufacturing Index Details Weak
Thursday's ISM report showed a gauge of imports fell to the lowest since May 2017, while an export orders index climbed from an almost two-year low for its first gain in three months.
The measure of new orders crashed 11.1 points to 51.1 while the reading for production dipped to 54.3, both the lowest since 2016. The index of supplier deliveries slumped to a one-year low of 57.5, indicating bottlenecks remain but are easing.
Gloomier data may give Fed policy makers, who have already said they intend to slow the pace of interest-rate hikes, more reason to pause. Ahead of the ISM report on Thursday, Dallas Fed President Robert Kaplan said the central bank should put rates on hold as it waits to see how uncertainties about global growth, weakness in interest-sensitive industries and tighter financial conditions play out.
Meanwhile, the ISM gauge of prices paid fell to 54.9, the lowest since June 2017. While that may largely reflect the recent plunge in oil, it adds to signs of contained inflation that provide little urgency for Fed rate hikes.
Earlier Thursday, the ADP Employment Survey estimated private-sector employment rose by 271,000 in December, more than expected. The Labor Department releases the official December employment report on Friday at 8:30 a.m. ET.
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The post ISM Manufacturing Index Suffers Worst Monthly Drop Since October 2008 Financial Crisis appeared first on Investor's Business Daily.
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