The ISM—the original and longest-running US survey of manufacturing conditions—fell fast in April. My extreme adjustment algorithm reduced the extent of the fall as you can see in the chart below. The program in effect assumes that the downward spike in April will be at least partially reversed in May. That may not be true. If the May number is also so weak, my extreme-adjustment algorithm will accept the May number unchanged. During the SARS outbreak in 2003, the downward spike was brief, and the extreme-adjustment program rightly corrected it. This time round, especially in the US, the decline will probly not be that short.
Unadjusted, the ISM fell to a point last seen during the GFC, in 2008/2009.
As usual, the average of the ISM and the PMI produces a time series with less random fluctuation. That's the green line in the chart below. Both component series have been extreme adjusted, so the comments applicable above to the ISM also applies to this.
No comments:
Post a Comment