How did this happen? Well, many people studied economics but didn't understand economics. Thus, they misinterpreted the economic data and reached the wrong conclusion. This is exactly the reason why I support the use of AI for economics and finance to reduce human misinterpretations and improve prediction accuracy.
https://www.investing.com/analysis/ism-manufacturing-pmi-to-rebound-in-september-200469451
As usual, let's look at the ISM PMI in detail.
The ISM PMI flow chart:
The ISM PMI had deteriorated further from 49.1 to 47.8 and this was the 6th consecutive month of decline. The prices increased to 49.7 because of the US-China tariffs as producers imported more raw materials from overseas instead of using more local raw materials.
The production reduction caused the supplier's deliveries, employment and inventories to decrease because the producers only manufactured to fulfill existing orders (backlog of order) and local orders due to frontloading by consumers before the impending new tariffs.
Needless to say, the upcoming US GDP and employment numbers will be extremely bad.
3 comments:
China PMI had improved to 49.8 from 49.5.
The US ISM PMI numbers in Aug and Sep were both lower than China's.
DJIA index fell more than 300 points because of this ISM PMI result.
Can you imagine those losses suffered by the investors who bought before the US market's fall based on the wrong predictions by the optimistic economists and analysts?
Thus, we need the AI badly to improve accuracy of the economic forecast.
The US stock markets fell heavily again because of this bleak ISM PMI.
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