ISM Makes Debt Ceiling Rebound Short-Lived

The Institute for Supply Management reported that manufacturing activity barely avoided contraction in July, the ISM manufacturing index dropping from 55.3 in June to 50.9 in July, where readings above and below 50 indicate expansion and contraction, respectively. While this marks the 24th consecutive month of expansion, it was the worst reading in two years, that is, since July of 2009, just as the Great Recession was officially declared to be over.

Naturally, the stock market is not taking this news well.

The ISM's new orders index indicated contraction for the first time since June 2009, dropping from 51.6 to 49.2, and the employment index plunged from 59.9 in June to 53.5 last month. The backlog orders index registered its lowest reading since April 2009, falling from from 49.0 in June to 45.0 in July indicating that companies are working down their backlog for lack of new orders, while price pressures continued to ease, the prices paid index dropping from 68.0 to 59.0.