New Numbers That Show Growth Despite a Slowdown

The Institute for Supply Management's Manufacturing Report for September is out today and contains some surprising numbers considering all the news of a global economic slowdown occurring.  Here is the quick glance:

MANUFACTURING AT A GLANCE SEPTEMBER 2011
Index	Series Index Sep	Series Index Aug	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI	51.6	50.6	+1.0	Growing	Faster	26
New Orders	49.6	49.6	0.0	Contracting	Same	3
Production	51.2	48.6	+2.6	Growing	From Contacting	1
Employment	53.8	51.8	+2.0	Growing	Faster	24
Supplier Deliveries	51.4	50.6	+0.8	Slowing	Faster	28
Inventories	52.0	52.3	-0.3	Growing	Slower	2
Customers' Inventories	49.0	46.5	+2.5	Too Low	Slower	30
Prices	56.0	55.5	+0.5	Increasing	Faster	27
Backlog of Orders	41.5	46.0	-4.5	Contracting	Faster	4
Exports	53.5	50.5	+3.0	Growing	Faster	27
Imports	54.5	55.5	-1.0	Growing	Slower	25
OVERALL ECONOMY				Growing	Faster	28
Manufacturing Sector				Growing	Faster	26

As you can see, most measurements are reporting growing.  Mish is concerned about the contracting backlog orders which makes it look like while production and employment is increasing, it isn't sustainable.  This type of worry could easily fit into the ABCT model as the Fed has been increasing the monetary base (23.3% annualized increase for the past 3 months) and as the chart shows, prices and exports are creeping up.  Whether Sept. was an blip in the radar of coming deflation and contraction or the beginning of another manipulated, sector wide boom will remain to be seen.  Even more of a sign of the latter is the new car sales have increased:

General Motors said its U.S. sales jumped 20% to 207,145 vehicles compared with September 2010. Chrysler sales surged 27% to 127,334 vehicles, marking the company's best September since 2007.
Volkswagen of America said sales of its VW brand rose 36% to 27,036 vehicles in September.

Gee, I wonder how much of the money made from those increased sales will go back to taxpayers for bailing out GM and Chrysler?

In other surprising econ news, take a look at this wonderful editorial Tom Woods dug up entitled "Economic Growth Surges, but Democrats Ignore the Truth Again" by Prez candidate Herman Cain:

Once again, when Democrats don’t like the facts, they just ignore them with the help of the mainstream media.

On August 26, Investor’s Business Daily reported data from the Internal Revenue Service showing that the average U.S. income had increased every year for five straight years through 2006. In fact, the $58,029 average was $739 higher than the peak year of 2000, the year before the 2001 recession.

The following day, Sen. Joe Biden declared in his vice-presidential acceptance speech that “John McCain thinks that during the Bush years we’ve made great progress economically, I think it’s been abysmal!” Great progress or abysmal, you make the call.

On August 28, the Associated Press reported the latest Commerce Department data showing that the economy grew faster than previously thought in the April-June 2008 quarter. Gross domestic product (GDP) grew at 3.3 percent, exceeding both the initial estimate and economists’ expectations.

As a reminder, we still have not had a recession since 2001, using the standard definition of a recession as two consecutive quarters of negative GDP growth. But don’t tell the Democrats and the mainstream media. You might disrupt their imaginary recession.

So what is so awesome about this article?  Well, it was published on September 1, 2008!!!!  With this amount of genius foresight, it's a wonder that Cain can't tell us when the "recovery" is coming already.  Being a college grad struggling to find work, I would really really like to know Mr. Cain.

About a week or so ago, I posted on Reggie Middleton's great layout of the current bank runs occurring in Europe right now.  Well, add another stick to the pile, via Bloomberg Businessweek:

Oct. 3 (Bloomberg) -- The Federal Reserve Bank of New York may ask foreign lenders for more detailed daily reports on liquidity as the U.S. steps up monitoring of risks from Europe’s sovereign debt crisis, according to two people with knowledge of the matter.

Regulators held informal talks with some of the largest European lenders about producing a “fourth-generation daily liquidity” or 4G report, according to the people, who asked for anonymity because communications with central bankers are confidential. The reports may cover potential liabilities such as foreign-exchange swaps and credit-default swaps, said one person. The U.S. has already increased the number of examiners embedded in these banks, the person said.

While I doubt the NY Fed will stop providing emergency bouts of liquidity to Europe until the powers-that-be say it can stop, this should give investors even more of a chill up their spine if they have money in in Greece, Italy, or France banks.

I will end with a bit of history in the most unlikely of places:

Update- Bruce Krasting has nice (by nice I mean worrisome) update on the Swiss National Bank's balance sheet.  As you should know, the SNB jumped in to devalue the franc over a month ago to stop hot inflows of capital into the country and prevent the franc from appreciating.  Here is the result:

The Swiss National Bank released its 8/30 balance sheet the other day.
The bottom line is that in August Swiss reserves rose by CHF 115b. A monthly increasing of 50% (Staggering). Domestic liquidity (sight deposits) rose an (unbelievable) 390% (CHF 49b to CHF 191B). This information covers the period when SNB bet the farm in an effort to stabilize/weaken the CHF. I’ve been looking at these results for days. Some very dramatic steps have been taken.
To provide some perspective consider where Switzerland sits on the rankings of foreign currency reserves to GDP.

This is not a list that Switzerland really wants to be on top of. There is very little reward that can be realized, there is a great deal of risk.
The increase in SNB sight deposits is somewhat analogous to the QE actions by the Federal Reserve. Both central banks have taken steps to electronically print money. The consequence is a sharp increase in the Balance Sheet of the CB. In both cases there is a huge pile of money created in the form of bank reserves (sight deposits).
In the USA the Fed has done (so far) $1.35T of QE. That comes to 9%% of GDP. The SNB, on the other hand, has done an amount equal to 25% of GDP in just one month.

And the race to the bottom continues.