ISM Lowest Since 1982

The U.S. ISM manufacturing index fell to 38.9 in August its lowest level since 1982. The leading indicator of new orders was even lower at 32.2 and production at 34.1. The report also indicates that export orders have started to fall, a decline which will get worse because of the global slowdown and the overvalued dollar. This strengthens my belief that the U.S. economy could contract as much as 4% or more during the fourth quarter and that this downturn will be the deepest and longest since the 1930s.

The euro area and Sweden also saw significant declines in their manufacturing purchasing manager's indexes, although the level is still higher in particularly the euro area. The U.K. surprisingly saw a small rise, but that is probably not sustainable and at 41.5 it still suggest contraction.