Advance reading of January manufacturing supports further slowdown I have been using an average of the five regional Fed new orders indexes to forecast the direction of the ISM manufacturing new orders index, and indirectly manufacturing production. Now that all five regional Fed indexes have been reported, here’s a comparison of the regional Fed averages (left) and ISM new orders (right) for all of 2018 plus this month: 2018 JAN 15 65.4 FEB 20 64.2 MAR 16 61.9 APR 17 61.2 MAY 28 63.7 JUN 24 63.5 JUL 24 60.2 AUG 17 65.1 SEP 20 61.8 OCT 18 57.4 NOV 15 62.1 DEC 8 51.1 2019 JAN 5 n/a That January’s average was even more tepid than December’s doesn’t mean that the ISM new orders index for January will be lower than
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Advance reading of January manufacturing supports further slowdown
I have been using an average of the five regional Fed new orders indexes to forecast the direction of the ISM manufacturing new orders index, and indirectly manufacturing production. Now that all five regional Fed indexes have been reported, here’s a comparison of the regional Fed averages (left) and ISM new orders (right) for all of 2018 plus this month:
2018
JAN 15 65.4
FEB 20 64.2
MAR 16 61.9
APR 17 61.2
MAY 28 63.7
JUN 24 63.5
JUL 24 60.2
AUG 17 65.1
SEP 20 61.8
OCT 18 57.4
NOV 15 62.1
DEC 8 51.1
2019
JAN 5 n/a
That January’s average was even more tepid than December’s doesn’t mean that the ISM new orders index for January will be lower than last month’s poor reading, but it certainly does suggest that weakness will continue, and we should expect an ISM reading closer to December than November.
In broader context, this is pretty reliable evidence that the manufacturing slowdown is for real, and will manifest itself more fully over the next 2-4 months. At the same time, the average of the Fed indexes is not negative, and so does not support a forecast of recession at this point.