The slow motion train wreck continues unabated and when employment goes bad, it all goes bad:


On the low side of expectations but not at increasing rates of contraction are the results of ISM’s manufacturing report for October. At 48.3, the index missed Econoday’s consensus by 1 point but gained a 1/2 point from September. New orders improved nearly 2 points in October but, at 49.1, are still under breakeven 50. New export orders, however, improved markedly, up more than 9 points and back over 50 at 50.4. Yet total backlogs are a major weakness for ISM’s sample, down another point and in deep contraction at 44.1.

Elsewhere contraction is roughly as deep as September, including production down nearly a point to 46.2 and employment up 1.4 points but still under 50 at 47.7. The sample drew down their raw material inventories but less so than September while, in a sign that capacity constraints are minimal, supplier delivery times posted a rare outright decline in the month. Given the indication from delivery times, the prices paid index is not surprisingly pointing to lower prices, down more than 4 points to 45.5.

The good news in this report is the rise in export orders, a move confirmed by the PMI manufacturing report which was released earlier this morning. Yet overall conditions are still very soft and are not pointing to any year-end acceleration for a sector that has been holding back the 2019 economy and where export-related trouble has helped trigger three straight rate cuts from the Federal Reserve.