The U.S. ISM plunged to a 2-year low of 54.1
The U.S. ISM plunged to a 2-year low of 54.1 from 59.3 in November and 57.7 in October, versus a 14-year high of 61.4 in August. The ISM is now below the prior 9-month low of 57.3 last April, though still well above the 47.8 expansion-low in January of 2016 that reflected the last big downswing for petroleum prices. Analysts're finally seeing a pull-back in sentiment from elevated 2017-18 levels. Until now, producer sentiment has defied market concerns about trade conflicts and global economic growth with a lift from fiscal stimulus and strength in trade and respectable global growth despite fears. The mining sector is facing a renewed headwind from falling oil prices however, and it looks like analysts are going to enter a pull-back period for the producer sentiment indexes. The ISM-adjusted average of the major producer sentiment surveys is falling to a 2-year low of 55 from 57 in October and November, and 59 cycle-highs in five of the six months through September. The average is dropping below the 57-59 range evident since September of 2017. Today's headline drop, and an employment index decline to 56.2 from 58.4, signals downside risk to our 205k December nonfarm payroll estimate, with risks that analysts discussed in Monday's commentary.