Wednesday, September 01, 2004

Slowing, slowing . . .
The nation's manufacturing sector posted slower growth in August, a report from the nation's purchasing managers said Wednesday, as the closely watched ISM index slumped below Wall Street forecasts.

The Institute of Supply Management said its purchasing managers index (PMI) of manufacturing activity fell to 59 in August from 62 in July. Economists surveyed by forecast a reading of 60.

Any reading above 50 shows growth in the sector. Thus, August marked the 15th straight month of growth for manufacturing.
While the ISM manufacturing index is indeed in its fifteenth month of expansion, it has given up a third of its margin of expansion (ratings above 50) since the January 2004 peak and is now at its lowest level of the past 10 months. Manufacturing employment is in its tenth month of expansion but slowed in August to 55.7, down from 61.9 just three months ago; that's half the margin of expansion gone in one quarter. Manufacturers' inventories are slowly expanding again and customers' inventories are slowing their contraction.

Big wheel keep on turnin', but turnin' real slow.

UPDATE: Both GM and Ford report late today that they'll be cutting production in the fourth quarter due to sluggish summer sales. Watch the ISM manufacturing index fall even more in the months ahead.


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