The stock market may have shaken off the December ISM’s 32.4 number, but investors should keep in mind that in the 61 year history of the ISM index, only three previous recessions (1949, 1974-75 and 1980) have seen lower ISM numbers. Even more concerning than the headline manufacturing index number was the report that new orders are now lower than they have been at any time in the 60 year history of the data.
The chart of the week below captures in ISM and the SPX from 1950. In addition to the obvious cliff dive that began in September, I find it interesting that the manufacturing index has been slowly trending down since hitting a high in May 2004.
As an aside, in 2009 I intend to devote more space on the blog to macroeconomic issues (particularly housing, manufacturing and consumer spending), as well global events that shape the geopolitical and economic landscape.
[source: Institute for Supply Management, VIX and More]