Earlier this morning MarketWatch reported that "Economists polled by MarketWatch anticipate November’s reading to be unchanged at 51.7%, and as all plus-50 readings indicate growth."
They were wrong.
The Institute for Supply Management (ISM) issued it's report at 10:00AM ET, showing that
U.S. manufacturing contracted (declined) and fell to it's lowest in over three years.
CBNBC reports:
The Institute for Supply Management (ISM) said its index of national factory activity fell to 49.5 in November from 51.7 the month before. The reading was shy of expectations of 51.3, according to a Reuters poll of economists.
A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.
The index hit its lowest since July 2009 and contracted after two straight months of growth that followed a soft period over the summer months.
The employment index fell to 48.4, and was below 50 for the first time since September 2009.
MarketWatch also said "Particular focus will be on the new orders component of the ISM gauge."
New orders fell to 50.3 from 54.2 and were at their lowest since August. Prices paid were down to 52.5 from 55.0, compared to an expected 53.0.
Other points from Bloomberg's Businessweek:
• Eleven of the 18 industries covered in the report reported business shrank last month.
• Business spending on equipment and software fell 2.7 percent at an annual rate in the third quarter, the first drop since the expansion began in mid-2009
• Capital spending has decelerated for four quarters.
Jerald Fishman, chief executive officer at chipmaker Analog Devices Inc, said that because of a lack of clarity on government tax policies, “people are just standing still and that impacts their capital spending budget.”
CNN Money headlines with "US manufacturers grind to a halt," and forewarn, the employment index showed factories have been cutting workers, a worrisome sign ahead of a key report on the U.S. job market due Friday.
[Update] Via WSJ:
Economists surveyed by Dow Jones Newswires had expected the November PMI to fall but only to 51.0.
Comments from the panel "indicate that the second half of the year continues to show a slowdown in demand; respondents also express concern over how and when the fiscal cliff issue will be resolved," the report said.
Emphasis mine.
Should Republicans cave and allow Obama to raise taxes, these businesses that will be caught in Obama's tax the rich scheme, will be sending the money they would be investing into the economy, to Obama's IRS instead.
The DC explains why, quite succinctly:
Why can’t the rich afford to pay more in taxes?
The rich can afford to pay more in taxes. If you raise their taxes, they’ll still be rich. We don’t need to worry about the rich. The reason that this is a bad time to raise taxes on the rich (or anyone else) is not because it would hurt the rich, but because it would hurt the rest of us.
How would raising taxes on the rich hurt the rest of us? Would we all start feeling emotionally depressed out of sympathy for the rich?
No, but we might feel economically depressed if the rich invest less in our economy. People are suffering now because there aren’t enough jobs. Higher taxes discourage business investment, which means fewer jobs for people who really need them. Ernst & Young has determined that President Obama’s proposals to tax the “rich” would cause our economy to lose 710,000 jobs — this at a time when all of us desperately need the economy to create more jobs. Ernst &Young further found that the president’s proposals would reduce wages, reduce investment, and reduce economic output. In other words, they would make us poorer. The rich can afford to be poorer; the rest of us cannot. And the poor can afford it least of all.
