ISM Recession Indicator Triggered For The First Time This Year

This morning, ISM’s monthly report on American manufacturing revealed that the sector unexpectedly entered into the deepest contraction last month since June 2009.

As a result, the ISM recession indicator, defined as the difference between the new orders sub-index and the inventories sub-index, flashed its first negative reading since August 2012, as the chart below illustrates.

The new orders sub-index fell to 48.8 in May from 52.3 in April, while the inventories sub-index rose to 49.0 in May from 46.5.

“While we strongly doubt the¬†US¬†economy is heading for renewed recession, the ISM’s recession indicator (new orders minus inventories) delivered a negative reading for the first time since August 2012,” says Miller Tabak Chief Economic Strategist Andrew Wilkinson. “Not worrying at this point, but something to keep an eye on next time around.”

ism recession indicator

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