On the one hand, there is the latest evidence that the softening of the economy continues. From The Skeptical Speculator...
After some contradictory data in the past few weeks, we have confirmation that US manufacturing growth slowed in September. From Reuters:
The Institute for Supply Management's manufacturing index fell to 52.9 in September, its lowest since May 2005. That was down from 54.5 in August and modestly beneath a median Wall Street forecast of 53.5. A reading above 50 indicates an expansion.
... and The Nattering Naybob Chronicles:
September ISM 52.9% vs prior 54.5%
Inside the number: employment 49.4% from 54.0%, inventories 46.4% from 50.2%, backlog 46.5% from 51.5%, prices 61% from 73%.
Slower growth with manufacturing losing momentum. Full Report.
In addition, last Friday's news on personal income and consumption (the latter helpfully graphed at Economist's View) helped reinforce the view that the air is leaving the tires. According to The Capital Spectator:
Reading this morning's update on August personal income and outlays raises new questions about consumer habits for 2007. And that, in turn, raises questions about the economic outlook...
To put a numerical face on the point, here's the sobering fact du jour: last month's advance in personal consumption expenditures was a thin 0.1%, the slowest since last November's 0.05%. There's no joy with personal income either, with August's 0.3% rise also posting the weakest since November 2005.
Adding insult to injury, personal saving was a negative $45 billion last month too, continuing the long-running line of monthly red ink on this measure.
On the other hand, today brought some positive news in the sector from whence nightmares come. At Econbrowser...
The National Association of Realtors released favorable news today on pending home sales.
From the NAR press release:
Pending home sales are up, indicating a stabilization is taking place in the housing market, according to the National Association of Realtors.
The Pending Home Sales Index, based on contracts signed in August, rose 4.3 percent to a level of 110.1 from a reading of 105.6 in July, but is 14.1 percent lower than August 2005.
David Lereah, NAR's chief economist, said the rise in the index is a hopeful sign. "Our sense is that home sales may have reached a low in August-- the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible," he said. "With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms."
... and Bizzyblog:
August construction spending was "unexpectedly" up --
WASHINGTON (AP) — Spending on construction projects unexpectedly edged up in August as the best gain in nonresidential activity in 11 months offset another big decline in home building.
The Commerce Department reported that construction spending rose by 0.3 percent to a seasonally adjusted annual rate of $1.20 trillion. It followed a huge 1 percent decline in July and represented the best showing in five months.
Analysts had been forecasting construction spending would drop in August, reflecting continued weakness in residential construction. However, a big drop in residential activity was offset by strength in office building and other nonresidential projects. Spending by state and local governments also rose.
Furthermore:
The [ISM manufacturing] index has bounced up before when the pundits thought that contraction was at hand, and I don’t see any reason that it won’t do so again, especially given the strong ISM report for the Midwest region that was released Friday.
If you want to be a skeptic, you might note that regional manufacturing reports have not been unambiguously positive. And it is unclear whether those pending home sales will prove susceptible to the cancellation rash (a story highlighted by Calculated Risk, as well as yours truly). But,for now, it appears that impending doom will wait at least one more month.