The ISM Manufacuring data on tyhe face of it looks OK by expanding at 50.1. However when we then consider this is barely within expansion territory (over 50) and the rate of expansion has nudged down by 0.1 from 50.2 last month, then we have more reasons than ever to take a closer look at the sub components.
Employment: For me this was the biggest downside surprise as it has changed from 50.5 in September to contraction at 47.6, breaking a 5 month bullish trend along the way. With Non-farm payroll data out later this week it is a stark reminder that we cannot be too reliant on the 'trader's favourite' employment set. If employment in manufacturing continues to decline then this will eventually seep through to the NFP data set in 6-12 months from now.
New Orders: However to counter the negative employment read new orders steps in to save the day. In the previous post I highlighted this was too close to 50 for confirm, so by expanding to 52.9 it leaves some assurance the 35 month bullish trend still has some legs in it (and orders to be filled further down the line).
PMI: At 50.1 the headline figure is too close to contraction for comfort, with the 34 month bullish trend slowing its rate. Also a cursory glance of the table above shows as much red than blue to further suggest we could indeed see PMI dip below 50 in the coming months to send further warnings of trouble ahead for the US economy.