Manufacturing drop “sharpest” in 3 years in August

posted at 10:41 am on September 4, 2012 by Ed Morrissey

While Democrats continue to fumble the “better off” question,  new economic indicators provided even more of a challenge to Barack Obama and his surrogates as the Democratic National Convention opens today.  Manufacturing dropped in August more sharply than any time in the last three years of recovery, and construction contracted at the fastest rate in a year.  Reuters manages to avoid the “U” word, although CNBC had it on the front page:

U.S. manufacturing shrank at its sharpest clip in more than three years in August while U.S. construction spending in July fell by the most in a year, new reports showed on Tuesday.

The Institute for Supply Management said its index of national factory activity fell to 49.6 in August from 49.8 in July.

The reading fell shy of the 50.0 median estimate in a Reuters poll of economists. A reading below 50 indicates contraction in the sector.

On Friday, just hours after Obama’s acceptance speech, the Bureau of Labor Statistics will release the jobs report for August.  The ISM index portends a bleak report:

The index’s employment component fell to 51.6, the lowest since November 2009, from 52.0 in July.

New orders, a forward-looking sub-index, fell to 47.1 in August, the worst showing since April of 2009. It stood at 48 in July.

Construction looks just as bad:

U.S. construction spending fell in July from June by the largest amount in a year, weighed down by a big drop in spending on home improvement projects.

The Commerce Department says construction spending declined 0.9 percent in July. It followed three months of gains driven by increases in home and apartment construction. New home construction rose again in July, but spending on home renovation projects fell by 5.5 percent.

Can’t blame me for the dropoff in home renovation projects — I’ve spent thousands of dollars in redoing the house, after 14 years of the status quo.  Obviously, I’m more the exception than the rule.  Renovation takes either a willingness to spend savings or take loans, both of which require a certain level of optimism about one’s personal economic situation as well as the overall economy.  Clearly, that optimism has dropped.  We’re now going back to the first months of the recovery, or even the recession itself when it comes to new manufacturing orders.

Democrats had better have an answer for these indicators and the overall economy during the next three days.  If they wait until the jobs report to start talking about the economy and a second-term Obama agenda in any serious way, they’ll likely have to play even more defense over the next two months.  The juxtaposition of Obama’s acceptance speech and the August jobs report make this the most critical in the cycle for Obama.

Update: Don’t expect much about second-term agendas, Major Garrett reports for National Journal.  The very mention flummoxes Democrats in Charlotte:

The easiest way to trip up a Democrat in Charlotte for the national convention is to ask him to answer this question: What is Obama’s vision for a second term?

The placeholder answer, of course, is “creating an economy built to last.” But this talking point has, even to Democrats, begun to wear thin. It’s often repeated, but lacks definition.

“Nobody really knows what that means,” said Joe Trippi, a Democratic strategist who handled Jerry Brown’s gubernatorial campaign in 2010. So even though Obama’s reelection slogan is “Forward,” there’s not much talk—at least not yet—of what the country would move forward toward, or of the specific policies that Obama would enact to propel the nation up and out of the current low-wattage economic recovery.

That’s because it’s become increasingly clear that Obama himself doesn’t know how to do that.  His Obama recovery barely materialized, and now it looks as though it’s fading even faster than Hope and Change.


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That picture says it all. We’re screwed!

LeftCoastRight on September 4, 2012 at 10:42 AM

The easiest way to trip up a Democrat in Charlotte for the national convention is to ask him to answer this question: What is Obama’s vision for a second term?

Some obama aide last week said the second term was all about filibuster reform.

Really. He said that.

lorien1973 on September 4, 2012 at 10:44 AM

As long as Ms. Fluke has a bucket of free condoms by the bed everything is fine. Why all this doom and gloom?

Bishop on September 4, 2012 at 10:45 AM

David Axelrod will no doubt be along shortly to inform us how this is evidence that the Obama economic model is creating the greatest economic recovery in human history and we only need to give Obama 4 more years to see it in full bloom.

Waking up in Hitler’s Bunker.

SWalker on September 4, 2012 at 10:45 AM

But Debbie WhaWhawasserman Schultz -” I know Nussing” -

just said.. on national TV… this weekend…. that Mfg was resurgent and jobs are coming back from China under Prex Ocommie.

She would never LIE about a thing like that. This data must be wrong.

FlaMurph on September 4, 2012 at 10:45 AM

They just need to get out there and lie more brazenly. This convention is really going to be something else.

forest on September 4, 2012 at 10:45 AM

What is Obama’s vision for a second term?

That’s easy to answer: The U.S. as banana republic.

Bitter Clinger on September 4, 2012 at 10:47 AM

Joe Trippi, a Democratic strategist who handled Jerry Brown’s gubernatorial campaign in 2010.

Some names are just perfect for the job. What was their slogan — Shrooms and Choom FTW?

jwolf on September 4, 2012 at 10:47 AM

The index’s employment component fell to 51.6, the lowest since November 2009, from 52.0 in July.

New orders, a forward-looking sub-index, fell to 47.1 in August, the worst showing since April of 2009. It stood at 48 in July.

Don’t get to hotsy totsy about those unemployment numbers all the BLM has to do is remove a million or so workers and you could have a number of 7.9ish.

THEN the Dems can point to “an improving job market”.

PappyD61 on September 4, 2012 at 10:48 AM

Besides the Dem meme today will be “these are reassuring numbers that show the economy is not OVERHEATING.”

PappyD61 on September 4, 2012 at 10:48 AM

Not better off than four years ago.

rbj on September 4, 2012 at 10:50 AM

The Democrats will open their Convention with the bad news from the manufacturing sector and ends with bad news from the August job number. Winning. Proceed “Forward”.

“Osama is dead and GM is intubated”– SloJoe.

bayview on September 4, 2012 at 10:50 AM

Then there’s CNN, pushing Chrysler’s best results for five years.

OldEnglish on September 4, 2012 at 10:50 AM

No one should be spending on ANYTHING until the end of October – unless it is absolutely essential to your life.

Every retail sale is, in effect, a vote for Obama.

This includes home renovation projects.

matthew8787 on September 4, 2012 at 10:51 AM

Besides the Dem meme today will be “these are reassuring numbers that show the economy is not OVERHEATING.”

PappyD61 on September 4, 2012 at 10:48 AM

That “economy is overheating” line has always cracked me up. “Good news is bad news”.

Bitter Clinger on September 4, 2012 at 10:52 AM

The easiest way to trip up a Democrat in Charlotte for the national convention is to ask him to answer this question: What is Obama’s vision for a second term?

So why is he running, exactly?

changer1701 on September 4, 2012 at 10:52 AM

I think you’re referring to the construction spending number, which came in at -0.9% (versus an expected +0.4%), a clear miss. the ISM number was 49.6, just a little below the expected 50.0. The PMI Manufacturing number came in at 51.5, slightly better than the expected 51.4. Auto sales for August were also reported today, and they looked good … Markets are booing the weak reports, as usual. Bad news this week may ensure QE3 in a couple of weeks, but most of the manufacturing weakness is being driven by global slowdowns in Europe and China … ISM non-manufacturing number on Thursday will be interesting … Summer calm is over, volatility returns to the markets in September …

TouchdownBuddha on September 4, 2012 at 10:52 AM

So the dems are crying foul because mitt wasn’t specific or new ideas

Lol…no ideas and all excuses from the dems

cmsinaz on September 4, 2012 at 10:54 AM

Now, new record numbers on Food Stamps…..

A 2nd Obama term will complete the U.S. transition from “Free Market Capitalism” to “Mason Jar Economics“.

All hail, THE PARTY OF DEATH.

Death to the unborn
Death to the elderly via death panels
Death to legal immigration
Death to American exceptionalism
Death to a free market America

PappyD61 on September 4, 2012 at 10:58 AM

http://www2.timesdispatch.com/news/rtd-opinion/2012/sep/04/tdopin01-gutted-ii-ar-2175328/

“Welfare Reform: Gutted II” Richmond Times-Dispatch doubles down.

bayview on September 4, 2012 at 11:01 AM

Yes, but the Dems manufacturing of lies is going as strong as ever. That, along with their empty promises should count for something shouldn’t it?

iamsaved on September 4, 2012 at 11:01 AM

U.S. manufacturing shrank at its sharpest clip in more than three years in August while U.S. construction spending in July fell by the most in a year, new reports showed on Tuesday.

On Friday, just hours after Obama’s acceptance speech, the Bureau of Labor Statistics will release the jobs report for August. The ISM index portends a bleak report

The national debt will tick up above $16T this week with no legitmate proposal from the left as to how to stop the bleeding.

——

Tell me again why we should give Obama a second term?

Happy Nomad on September 4, 2012 at 11:03 AM

So why is he running, exactly?

changer1701 on September 4, 2012 at 10:52 AM

For the perks.

Doughboy on September 4, 2012 at 11:04 AM

http://www2.timesdispatch.com/news/rtd-opinion/2012/sep/04/tdopin01-gutted-ii-ar-2175328/

“Welfare Reform: Gutted II” Richmond Times-Dispatch doubles down.

bayview on September 4, 2012 at 11:01 AM

Excellent. Particularly loved the closing:

Nevertheless, the Democratic Party faithful insist Romney is wrong because “the president said it, I believe it, and that settles it.” Who says religion and politics don’t mix?

changer1701 on September 4, 2012 at 11:04 AM

I love it when the dems say that GM & Chrysler would be dead without Obama stepping in…..

Newsflash – these are dead companies walking. Obama just put some makeup on the corpse.

America would be better off without the government distorting the marketplace….

Now about those student loans….

redguy on September 4, 2012 at 11:04 AM

Bank crisis underway in Spain today.

Can’t provide the CNBC link here. Have tried 4x to post it and it won’t accept the post.

It’s out on Drudge.

PappyD61 on September 4, 2012 at 11:05 AM

Obama is the Tidey Bowl man in his little boat swirling in the great commode that he has reduced our economy to.

Only the water isn’t blue.

1921 C DRUM on September 4, 2012 at 11:05 AM

Bless their hearts.

parteagirl on September 4, 2012 at 11:06 AM

“Welfare Reform: Gutted II” Richmond Times-Dispatch doubles down.

bayview on September 4, 2012 at 11:01 AM

Wow! and the RTD isn’t exactly a right-wing publication.

Happy Nomad on September 4, 2012 at 11:07 AM

“creating an economy built to be last.”

FIFY

The Rogue Tomato on September 4, 2012 at 11:08 AM

Headwinds. Well, Mr.I Won, that’s what you get when you’re all wind. It’s turning into a perfect storm, with the climax on Nov 6.

JimK on September 4, 2012 at 11:10 AM

Hey, Mr. President, why not say what you feel?
Your vision for the next term:
- do away with term limits so I can be President for a very long time
- do away with Congress, completely. This will have a 2 fold benefit. Save taxpayer funds, & they can count on me for wisdom in all my executive orders.
- more stimulus, bailouts & strengthening public unions
- raise taxes on the 50% that pays taxes
- shrink the middle class until there’s no more middle class, & only the uber-rich & the poor

Belle on September 4, 2012 at 11:10 AM

Obama just put some makeup on the corpse.

redguy on September 4, 2012 at 11:04 AM

It was never about saving the companies. It was about figuring out a way to transfer massive amounts of public dollars to the UAW. Mission complete. Govt Motors can fail anytime now.

Happy Nomad on September 4, 2012 at 11:11 AM

Too bad manufacturing excuses doesn’t count, otherwise the sector would be BOOMING, thanks to the Democrats!

NoDonkey on September 4, 2012 at 11:12 AM

All hail, THE PARTY OF DEATH.

Death to the unborn
Death to the elderly via death panels
Death to legal immigration
Death to American exceptionalism
Death to a free market America

PappyD61 on September 4, 2012 at 10:58 AM

Now now pappy, you say that like it’s a bad thing, you aint no raaaaacist or anything… Are you?

SWalker on September 4, 2012 at 11:13 AM

I wonder who the Democrats are sueing or threatening as we speak to make the number on Friday at very least even… I bet they can make is show a slight decrease… they have been able to do it all along… every number is revised down a month later… but Friday is very important.

I expect Friday to be the biggest lie ever told. If unemployment is up… it means they couldn’t lie enough to make it look good without getting caught… and that means it is much much worse.

I am so disgusted with the polls.

This whole country is completely corrupt.

petunia on September 4, 2012 at 11:13 AM

This will still not prevent Obama from babbling about creating jobs and how good he is for the “middle class.”

However, the ads will write themselves once he says that, the jobs number is under 100k, and unemployment stays untouched. He will, or at least should, get hammered for weeks on that in swing states leading up to the debates.

milcus on September 4, 2012 at 11:14 AM

It was never about saving the companies. It was about figuring out a way to transfer massive amounts of public dollars to the UAW. Mission complete. Govt Motors can fail anytime now after November 6th.

Happy Nomad on September 4, 2012 at 11:11 AM

Slight correction.

Bitter Clinger on September 4, 2012 at 11:15 AM

Oops!!

News Viewer
***********
http://www.marketwatch.com/story/newsviewer?siteid=bnbh

Bulletin Ford’s domestic sales up 13% in August
http://www.marketwatch.com/story/ford-aug-us-sales-rise-13-2012-09-04

Nissan August total US vehicle sales up 7.6%, estimated up 12% – @BloombergNews

31 mins ago by editor

@BloombergNews tweeted:
BloombergNews
BREAKING: Toyota August U.S. vehicle sales up 45.6%, estimated up 40%

45 mins ago from twitter.com by editor

https://twitter.com/BloombergNews

canopfor on September 4, 2012 at 11:17 AM

Wait until the horrific unemployment numbers come out on Friday.

eyedoc on September 4, 2012 at 11:20 AM

Renovation takes either a willingness to spend savings or take loans, both of which require a certain level of optimism about one’s personal economic situation as well as the overall economy.

man-o-man you hit my nail on the head with this statement Ed. My wife wants to put a pool in. I have been reviewing the finances of Houston and there is a huge push not being mentioned to go big on the revenue increases via taxes and fees. And all of the problem starts with the unbelievable explosion in spending commitments for about 20,000 city employees over the past decade. Nov. 6 will bring a vote to authorize bonds that won’t sell. That will allow them to raise property taxes by 4.5% and I’ll bet that won’t be in the ballot language.

Heads up. Anybody thinking of moving down here better look to the suburbs.

DanMan on September 4, 2012 at 11:20 AM

I know of three multi-million dollar real estate transactions to close near the end of the year, each one after the election. I suspect the buyers will walk from their deposits and short the R E and equities markets if this bozo is reelected. Welcome to the new normal.

nimrod on September 4, 2012 at 11:21 AM

Didn’t Obama say a while back that “climate change” would be the most important thing in his second-term agenda?

TarheelBen on September 4, 2012 at 11:22 AM

I love it when the dems say that GM & Chrysler would be dead without Obama stepping in…..
Newsflash – these are dead companies walking. Obama just put some makeup on the corpse.
America would be better off without the government distorting the marketplace….
Now about those student loans….
redguy on September 4, 2012 at 11:04 AM

I work in 100% civilian manufacturing, medium-sized manufacturer of specialized gear production machine tools and tooling. The only customers keeping us alive right now are located in China and India. Our Euro sales are soft, our Americas business is a joke, and few machines are headed to S. Korea and Japan these days. The weak dollar is what is what is helping us keep busy.

Every time Man Child In Chief gets up in front of a crowd and starts bloviating about manufacturing (usually union folks in Dem-friendly places, and sundry sycophants of his) I have the urge to wretch. They guy doesn’t have the first clue about how stuff is manufactured, or the root causes of industrial decline in this country.

You’re exactly right about GM and Mopar, the former is in absolute horrid shape, though. They’re practically pushing vehicles out the door, while paying zero federal taxes. GM now has a sub-prime financing division to help their sales numbers. Their bottom line is a different story. Another recession would ruin GM.

Funny how Prezzy doesn’t speak of the Southeast, which has become a hub of auto and auto components manufacturing in recent years. It’s as if Greenville, SC doesn’t exist, or for that matter San Antonio or Houston.

The sooner he’s gone, the sooner we can get down to doing the dirty work of creating real jobs in this country.

franciscodanconia on September 4, 2012 at 11:22 AM

The manufacturing number was “unexpectedly” down; what a surprise! These experts that keep making these “unexpected” predictions are those that are continually referred to when a politician (including the POTUS)says ALL the ___________ (fill in the blank but my favorite is “economists”) say that we are on the right path to recovery. What a bunch of crap but it is repeated constantly. Now we have to wait until Friday for the new unemployment number (sorry to use that word because I know that the administration has demanded that the press refer to these matters as the EMPLOYMENT number); my guess is that the government will make an unexpected claim that a record number are being employed. Not that since it is a number controlled by the administration it will reflect an “unexpected” turn in the “right” direction but I’ll leave that to the “experts”.

Pardonme on September 4, 2012 at 11:28 AM

WAR ON WOMENZ!!!! ABORTION!!!! GHEY RUGHTS!!!
/libitard

Eventually this concern over how bad the economy will take a back burner while the progressives work on our kids. Once you get em young they will soon think papa sam will look out for them and stuff… but right now WE can change course.

watertown on September 4, 2012 at 11:28 AM

President Barack “Unexpectedly” Obama

J_Crater on September 4, 2012 at 11:29 AM

Empty Chair + Forward = ?????????????

Surely there is a devastating graphic in the making somewhere?

tomg51 on September 4, 2012 at 11:31 AM

Didn’t Obama say a while back that “climate change” would be the most important thing in his second-term agenda?

TarheelBen on September 4, 2012 at 11:22 AM

You don’t need a weatherman to tell you Obamanomics blows.

NoDonkey on September 4, 2012 at 11:32 AM

Wait until the horrific unemployment numbers come out on Friday.

eyedoc on September 4, 2012 at 11:20 AM

Not going to happen. The administration is working overtime to cook the books. This Friday’s announcement will have the best looking results in months. All of it will be revised in future reports, but the revisions will be applied slowly during the campaign season.

/Yeah, I’m that cynical

AZfederalist on September 4, 2012 at 11:35 AM

The placeholder answer, of course, is “creating an economy built to last.” But this talking point has, even to Democrats, begun to wear thin. It’s often repeated, but lacks definition.

Ha, as much as we talk about an impending collapse of the economy, it can never disappear altogether. As long as two people trade one thing for another, there will be an economy. So, an economy is, by its own definition, “built to last” as long as there are two people available to engage in trade and that is something Obama is incapable of eliminating.

The question here, considering Obama’s proclivity to word something that is true on it’s face but entirely misleading, is whether he wants to create a worse or a better economy that lasts.

Dusty on September 4, 2012 at 11:40 AM

C’mon now, he can’t actually come out and state his plan!

1) He has too big an ego to admit what he’s doing isn’t working
2) What he’s doing IS working BY HIS STANDARDS. Cloward-Piven would give him at least a B+ for his progress on bypassing laws (Immigration, Welfare) and destroying the US financially.

He’s hoping to win by tearing down Romney and soaring rhetoric. And if he does, I hope you have a stock of food, live in the country and own weapons.

PastorJon on September 4, 2012 at 11:40 AM

The easiest way to trip up a Democrat in Charlotte for the national convention is to ask him to answer this question: What is Obama’s vision for a second term?

So why is he running, exactly?

changer1701 on September 4, 2012 at 10:52 AM

…WTF?…you’re all looking for answers… when the real reason is Mooch needs 4 more years to implement the vacation plans she has had to put on hold!

KOOLAID2 on September 4, 2012 at 11:41 AM

Obama slogan: “Failure is Success!”

The word out to all the Obama operatives is just a 3-letter word: Lie.

Just lie about everything. Bad news is really good news! :-)
Bad news is…well, it could have been worse! :-)
Vote Obama because the other guy could be worse! :-)

The average voter is mostly ignorant about things, so the Democrats figure they will just lie and weave their falsehoods.
They know the press will cover for them.
Even Fox. Have you seen any reporter really drill down and show these politicians are lying?
Nope, one question per subject and move on.

albill on September 4, 2012 at 11:47 AM

Atlas is shrugging.

Doug Piranha on September 4, 2012 at 11:51 AM

David Axelrod will no doubt be along shortly to inform us how this is evidence that the Obama economic model is creating the greatest economic recovery in human history and we only need to give Obama 4 more years to see it in full bloom.

Waking up in Hitler’s Bunker.

SWalker on September 4, 2012 at 10:45 AM

Awesome column! Loved the site – thanks for posting this!

pos4thst on September 4, 2012 at 11:57 AM

out of the current low-wattage economic recovery.

Democrat recoveries look a awful lot like Republican depressions.

Herb on September 4, 2012 at 12:09 PM

If unemployment ticks up on the next report (which is looking likely) I think that’s when Obama is finished, no matter how good a speech he gives at the Convention. That will set the tone for the rest of the campaign and the die will be cast.

If this country doesn’t get rid of a President with an 8.3% unemployment rate that is steadily rising while we’re going off a fiscal cliff, we’re finished as a nation.

BradTank on September 4, 2012 at 12:11 PM

KOOLAID2 on September 4, 2012 at 11:41 AM

Also ask them if they could explain just what was his plan the first 4 years.

Herb on September 4, 2012 at 12:12 PM

And why should these sectors show improvement? Huge tax increases are looming on the horizon. We’re getting diddly shit on our savings and our health care benefits are about to get a whole lot worse. Why should anyone be out spending money after what the big Zero has done to the economy?

COgirl on September 4, 2012 at 12:17 PM

TouchdownBuddha on September 4, 2012 at 10:52 AM

Yes, it will keep bouncing – the Dow is down close to 100pts as we speak and it will keep bouncing along. The market has stopped looking at anything outside of QE rumors, moving on any report out of the Fed or EUrope or the upcoming Chinese action as well.

China is bad, as is India. And of course Europe is in the dumps. In the US, employees are now viewed as higher cost liabilities. Not a fixed cost yet as in other parts of the world. That cash US multinationals are sitting on will stay there until Obama is gone – if he stays the new normal unemployment rate is around 8%. That assumes cap n trade is held off. If not, look for that new normal to stay above 9%.

Zomcon JEM on September 4, 2012 at 12:20 PM

Also ask them if they could explain just what was his plan the first 4 years.

Herb on September 4, 2012 at 12:12 PM

Barack Obama: My plan for my first 4 years was, Shut up, that’s why…

SWalker on September 4, 2012 at 12:25 PM

Democrats had better have an answer for these indicators and the overall economy during the next three days.

Why would they even talk about this? It has nothing to do with Women’s health issues like free unlimited contraception or free unrestricted abortions up to and through delivery. And it has nothing to do with equal justice on marriage either. And gosh, don’t you wish the GOP would stop focusing on social issues and talk about what really matters to the people? /s

KW64 on September 4, 2012 at 12:35 PM

Empty Chair + Forward = ?????????????

Surely there is a devastating graphic in the making somewhere?

tomg51 on September 4, 2012 at 11:31 AM

Maybe Paul Ryan throwing an empty chair off the fiscal cliff?

KW64 on September 4, 2012 at 12:43 PM

I can’t wait for the media to use the u-word when the Teh Won gets released to pursue his PGA dreams come November.

Travis Bickle on September 4, 2012 at 12:53 PM

It’s official, sub 50 on the ISM indicates that roughly 12% of the US GDP is shrinking. Bad news for Dems as union members probably recognize in their shop floors that orders are falling off.

Employment report on Friday, National Debt crosses over $16 Trillion and a shrinking economy….

Incomplete indeed.

R Square on September 4, 2012 at 1:41 PM

Empty Chair + Forward = ?????????????

Surely there is a devastating graphic in the making somewhere?

tomg51 on September 4, 2012 at 11:31 AM

Oh, yes!

Empty Chair + Lean Foward = Bow to foreign leaders!

https://p.twimg.com/A12WK6tCcAAgSfd.jpg

Well done, Luis Rosas!

https://twitter.com/Rosas77/status/242512983480221696

ITguy on September 4, 2012 at 6:33 PM

Don’t worry Matthew8787, we won’t be buying anything except gasoline and groceries. We can’t afford anything else and if Obummer is reelected I guess we never will be able to afford anything else.

sherrimae on September 4, 2012 at 8:18 PM