More fuel here for the recession thesis as today’s Chicago PMI report came in at a sub-50 reading. The underlying data tells an even weaker story as production, new orders and employment all dropped substantially (via Chicago ISM):
“The Chicago Purchasing Managers reported the Chicago Business Barometer fell to 49.7, its lowest level in three years. Among the Business Activity measures, five of seven posted declines as New Orders fell below 50 and Order Backlogs contracted for the fourth of the past five months. Prices Paid showed the biggest gain in nearly two years and Supplier Deliveries moved back above 50.
BUSINESS ACTIVITY:
• EMPLOYMENT: 2 1/2 year low;
• NEW ORDERS, ORDER BACKLOGS, and SUPPLIER DELIVERIES: 3 month moving averages lowest since mid 2009;
• PRICES PAID: third consecutive monthly gain.
BUYING POLICY:
• CAPITAL EQUIPMENT: 17 month low.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.