[Premium]: My thoughts on first contraction in US manufacturing activity since 2009

The Institute for Supply Management released its widely-followed index of manufacturing activity today. The data show that the US manufacturing sector contracted in June for the first time since July 2009. Given economic weakness elsewhere in the global economy, we should see this as a troubling sign.

Of particular concern is the drop in new orders, where the New Orders Index dropped 12.3% in June to a recessionary 47.8%. All of the major subindices I follow, new orders, production and employment, declined.

About a year ago I correctly predicted that the US manufacturing sector’s growth had already started its cyclical descent, calling the peak in early March. What we have witnessed since then has been a steady decline in the growth in that sector, arrested to a degree by polic...

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