So ‘the Sky is Falling’ on California Manufacturing(?!)

‘October is, for unknown reasons, the worst month in memory.’ A month ago, the Institute of Applied Research, which publishes the Purchasing Managers’ Index for the Inland Empire – with about 4 million people, the third-most populous region in California – reported: ‘We are not yet ready to say that ‘the sky is falling.”
Back then, they were lamenting that the Inland Empire PMI had dropped below 50 for the second month in a row (below 50 = contraction), hitting 44.1 in September, after having already hit 46.6 in August. But the sky wasn’t falling ‘yet,’ the report pointed out, because, given how volatile the index is, ‘it takes three months of figures below 50 before a new trend (in this case a trend of contraction rather than growth) is established.’
Alas, on Monday, the IAR released the Inland Empire PMI for October, and it was sharply below 50 for the third month in a row, this time at 45.9.
So is the IAR now ‘ready to say that ‘the sky is falling?” We don’t know. The authors didn’t specifically address the issue. We only know that the index is falling – and a lot: back in April, it was still flying high at 60.

This post was published at Wolf Street on November 3, 2015.