ISM Manufacturing Report on Business: August 2016

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity worsened notably in August with the overall PMI falling into contraction.

At 49.4 the purchasing manager’s composite index (PMI) declined 6.08% from July and slumped over 6% below the level seen a year earlier.

ISM Manufacturing Report on Business: February 2016

Today, the Institute for Supply Management released their latest Report on Business for the manufacturing sector indicating that manufacturing activity remained weak in February continuing to contract for a fifth consecutive month.

At 49.5 the purchasing manager’s composite index (PMI) rose 2.7% from January but slumped 6.43% below the level seen a year earlier giving a solid indication of contraction for manufacturing.

The Chicago Fed National Activity Index: August 2010

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic activity weakened notably in August with the index declining to -0.53 from a revised -0.11 in July while the three month moving average declined to -0.42.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

It’s important to note that at -0.43 the current three month average index value is indicating extremely weak growth near the recessionary level of -0.70.

Total Real Estate Lending Contracts!

As a further indication that we are currently experiencing reasonably unprecedented economic trends, the total of all real estate loans for all commercial banks has just registered its first nominal annual decline on record.

This is particularly notable given that the series stretches all the way back to 1947 and thus captures a host of trying economic times including eleven separate recessions.

October 2009 registered a 1.70% annual decline followed by a tepid 0.06% increase in November and then a 0.38% decline in December bringing the total real estate loans held by commercial banks to just over $3.80 trillion.

The following chart (click for full-screen dynamic version) plots real estate loans at all commercial banks since 1947 along with the annual percent change of real estate loans. The light yellow bands indicate U.S. recessions.

Aside from reduced demand, if you want to know what might be keeping banks on the sidelines tightfisted and unwilling to lend take a look at the following chart (click for full-screen dynamic version) that plots nonperforming total loans for all commercial banks.

Notice that as of Q3 2009 the nonperforming loan ratio reached 5.03%, the highest percentage of delinquent or nonaccrual loans to total loans seen in at least twenty years.

The Chicago Fed National Activity Index: November 2009

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic activity contracted again in November with three of four component indices declining and with the personal consumption and housing component showing the weakest results.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national is expanding at its historical trend rate while a negative value indicate below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

It’s important to note that at -0.77 the current three month average index value is well within the official recessionary indicator mark while October’s literal value has strengthened a bit to just -0.32.

The following charts (click for full-screen interactive zoom-able version) plot the national activity index as well all of its four components.