The Sept ISM manufacturing index was about in line with expectations at 54.4, down from 56.3 in Aug, off 6 pts from the recent high in April and the lowest since Nov ’09. New Orders fell 2 pts to 51.1 and Backlogs dropped by 5 pts to back below 50 at 46.5, both at the weakest levels since June ’09. The Employment index fell almost 4 pts to 56.5, the lowest since Mar. Inventories at the manufacturing level moved higher by 4.2 pts to 55.6, the highest since 1984 and is not welcome if we do not see a further pickup in end demand. Customer Inventories fell 1 pt to 42.5. Prices Paid followed the recent rise in commodity prices as they rose 9 pts to the most since May at 70.5. Bottom line, manufacturing is moderating but with Fed member Dudley saying if things don’t improve they will act again, the market feels like it has a free put (again) on weaker economic data up until the Nov meeting.
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