Tuesday, 3 July 2012
ISM falls more than expected
Especially new orders (inclusing exports) were disappointingly down: from a good 60.1 to a bad 47.8. Employment remained good at 56.6 (last month 56.9). ISM told the decline was mainly caused by uncertainty about growth in Europe and China (that is not in my little model).
When the ISM should remain at current levels economic growth in the US will be c. 1-1.5%. before the credit crisis this was higher. A recession could start at ISM’s below 47 (before 2008: below 43).
For the next months the ISM is expected to rise because real retail sales will be better because of lower oil prices, also initial claims will be lower because of this.
In Europe the ISM’s were even lower. They are now that low a further decline will not be big, this could be the bottom.