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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Manufacturing Drops in September, Pending Home Sales Rise

A widely watched gauge of U.S. manufacturing activity came in well below expectations in September, the Institute for Supply Manufacturers said moments ago.

The ISM's index of manufacturing activity was 52.6 in September, down from the August number and well below expectations, which forecast the index to be 54.

Also, moments ago, August data on pending home sales and construction spending were released.

Pending home sales in August rose 6.4 percent compared with July, and were up 12.8 percent over August of 2008. It marked the biggest gain since March 2007.

It's important to note that this is a measure of contracts signed, not closings, which actually went down in August. Reason? There have been lengthy delays between contract-signings and closings, partly thanks to new appraisal rules, which are drawing out the closing process.

Construction spending rose 0.8 percent in August, much higher than the 1.1 percent drop in July. The August number beat expectations, which pegged construction spending to drop 0.2 percent.

Overall, this last raft of important economic data due out this morning is a mixed bag, at best. U.S. manufacturing needs to rebound if there is to be a recovery. As for the pending home sales, they were likely goosed by the government's $8,000 first-time home buyer credit, which expires at the end of next month, though the housing industry is lobbying the government to continue it.

The point, however, is that the housing credit -- like the Cash for Clunkers program -- is a Red Bull caffeine surge into a moribund economy. It's quick, but it doesn't last. It is meant to be a bridge out of tough times, but until we can see some organic growth, no recovery can be said to be underway.

-- Frank Ahrens
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By Frank Ahrens  |  October 1, 2009; 10:18 AM ET
Categories:  The Ticker  | Tags: ISM, construction spending, pending home sales  
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Comments

This post misinterprets the Purchasing Managers Index. A PMI above 50 indicates expansion, which means manufacturing did not drop.

The rate at which manufacturing grew did slow from August.

Posted by: rkwadd1 | October 1, 2009 11:00 AM | Report abuse

Of course mfg. is soft. As long as Americans are unemployed or under-employed, they will NOT be able to buy new cars, new houses, furniture and appliances for those houses, etc. Its
all about JOBS, JOBS, JOBS! As long as
we have a president who is Anti-business
and Pro-taxes, this situation will not improve. We need leaders who have business background and know what it takes to drive the economy.

Posted by: ohioan | October 1, 2009 11:08 AM | Report abuse

NOTHING that comes from CHINA is worth having ... everything in the new house is made there .

Real Estate taxes in SOME STATES is so high that nobody will consider buying there. In those same States , UNEMPLOYMENT AND UNDEREMPLOYMENT IS way up ....The only jobs there are being given to INVADERS

We will be counting on refugees from war torn countries to use their AFFIRMATIVE ACTION credentials to put the country back to work after the LIBIDIOTS get their MARXIST way.

All " YE-E-ES WE-E-E CA-A-AN " chanters will wake up bewildered by their own stupidity when they see that
...WHEN SATAN said he wanted to ... "SPREAD THE WEALTH" AND create more jobs ... he didn't mean ... FOR THEM. They were just what Hitler called " usefull idiots"

Posted by: noHUCKABEEnoVOTE | October 1, 2009 11:21 AM | Report abuse

Unions are the death of our economy; we can't compete globally if we're paying $70/hr. between salary and benefits. And
our schools/students can't compete if they're taught by teachers who are not paid for performance.. instead, they're paid for the time they've put in. Its a vicious circle, and Obama is only encouraging it by supporting unions.

Posted by: ohioan | October 1, 2009 11:39 AM | Report abuse

Hi, my name is Chicken Little and I just wanted you to know that the sky is falling? Just so you know.....

Posted by: jyang26 | October 1, 2009 11:45 AM | Report abuse

Manufacturing is the key to the United States' way out of the mess we are in. Until manufacturing jobs are returned and created and we beginning selling U.S. manufactured goods world-wide, we will continue being a service-oriented economy. The American economy was built on manufacturing, and that is what we must return to if we are going to keep people employed and living above poverty.

Posted by: sdl63 | October 1, 2009 11:50 AM | Report abuse

Really Letting Go means forgetting the things that don't work that will never work again. Focus on what works because that's what is needed. I'm changing my routine.

Posted by: Dermitt | October 1, 2009 6:01 PM | Report abuse

"Post stories will be available in real time on Bloomberg’s terminals, a fixture on Wall Street analysts’ and traders’ desks. The addition of Bloomberg financial news will strengthen the Post’s financial coverage, especially on washingtonpost.com." That should make work easier and more productive. More profitable too hopefully.

Posted by: Dermitt | October 2, 2009 11:31 AM | Report abuse

There is a strong case to be made for a second Economic Recovery stimulus package. States are having to resort to layoffs despite having received substantial infusions from the 2009 Economic Recovery and Reinvestment Act. They were able to retain more workers than they would have without the Recovery Act but they are still really struggling. While unemployment is likely to hit 10% before the end of this year, there is chronic underemployment with many folks working part-time rather than full-time. There are many people who have completely left the job market.

We also have no consumer spending bounceback in sight. While I know there will be whining and hand-wringing about the budget deficit, the large numbers of unemployed are depending upon government services, especially Unemployment payments from the state, and are not generating tax revenues as they would if they were employed. That is why the government must step in to stimulate more economic activity and economic growth. So long as there are so many unemployed and so few jobs there will be insufficient revenues.

Once the smoke clears and Health Care/Insurance Reform is passed later this Fall, the President should propose a second Economic Recovery package with the idea of getting that passed before his State of the Union address in January 2010. He should call upon Congress to stay in Washington and work through the holidays if necessary. Call upon Congress to work weekends to do the people's business. Part of the problem in politics now is that Senators and Representatives spend too much time at home, and not enough time in Washington actually legislating and doing the nation's business. Put Congress to work and get these economic problems solved.

Posted by: OHIOCITIZEN | October 3, 2009 3:38 AM | Report abuse

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