Three Strikes and You’re Out

Can the economic news get any worse? Today, February 29, we got three reports of new data and they were all terrible. Now I know why they call this a leap year, as in leap off a cliff.

We started with the Chicago PMI, which lurched from expansion in January to contraction in February. The Chicago PMI is compiled by the Institute for Supply Management from a survey of business conditions in the Chicago area including both manufacturing and non-manufacturing firms. At a headline 47.6, Chicago’s PMI fell well below the consensus range. Production is down sharply, backlogs are in a 13th month of straight contraction, employment is down and in its fifth month of contraction, and prices paid are contracting at the fastest pace since 2009. Here’s the headline data:

Next, we got the pending home sales data which slowed in January, down an unexpected 2.5 percent.

Finally, we got the Dallas Fed Manufacturing Survey and the data was dreadful. In New orders contracted a further 8.4 points in the month to minus 17.6 for their lowest reading since 2009 in what is a very ominous signal for the months ahead. Unfilled orders are also in contraction as are production and shipments. Price contraction deepened for both raw materials and selling prices. Inventories are down as is employment. All 17 current components of the index are in contraction.

Investors beware: The stock market is not priced for this data.