The latest ISM PMI is an aberration because the US consumption, GDP and savings rate are declining. - Part 2

We were proven right in our previous post that the spike in the previous PMI was an aberration. Let's do our usual analysis below.

Missing parameter:

Estimated Local New Orders: New orders - New Export Orders = (-3) - 0.2 = (-3.2)

Estimated Local Material: Inventories - Imports = (-0.6) - (-3.2) = 2.6

The prices stopped declining (stagnant) because the Iran-US peace deal was called off as the oil price declines started to reverse course.

The producers cut back on their production (-0.2) and employment (-1.6) because the US consumers reduced their spendings that affected the new orders (-3) and local new orders (Est'd -3.2).  The marginal increase in new export orders (0.2) couldn't neutralize the significant drop in local consumption.  Consequently, this caused the customers' inventories to increase (2.1) and the backlog of orders to decrease (-3.2) due to falling orders.  In other words, the producers were focusing on clearing their backlog of orders as there was a significant drop in new orders.

As a result, the ISM PMI dropped to 54.6 (-1).  If the US can't contain its inflation, the US consumption will continue to fall further because of the high prices and low US personal savings.  In the end, the US GDP growth will continue to tread on its weakening trajectory.