The Institute for Supply Management does a pretty fair job of explaining the numbers themselves:
http://www.ism.ws/ismreport/mfgrob.cfm
There are two things that stand out in this report for me:
1. orders are slowing down.
2. both the inventory levels are shrinking and backlogs are coming down. This tells me that business managers are tightening belts, not wanting to carry inventory - which in turn means reductions in orders, which means lower backlogs.
There’s a break-out of producer inventories vs. customer inventories in the release.
The employment component is only “slowing,” not contracting.
What this says is reflective of what small business has been seeing for three years now: Customers are not there. Customers’ buying power is not there.
Now, all of this isn’t causing today’s reaction on Wall Street. What has Wall Street is a one-day tizzy is how badly their models for predicting today’s number utterly failed. The economy isn’t showing behavior consistent with their leading indicators that have previously shown predictive skill.
Market economists’ models of economic growth have utterly failed in this recession. Macro-econ models for employment, stimulative effect of government spending, stimulative effect of low interest rates (ie, both Keynesian and monetary policy economics) have failed in their predictive powers. Market economists have so often used the word “unexpected” in their press releases analyzing the most recent economic data releases that it turned first into a drinking game, then turned into serious liver damage.
People are going to have to admit the failure of modern economics sooner or later, and the sooner they do, the less of a hole we’ll dig ourselves.
Excellent, couldn’t have said it better myself. You’ve pretty much laid out the landscape of what is going on.
Reading through your material I still didn’t see what questions they ask. We really need to know what they are to see if the data can be meaningful.