Still not good!
The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased 6 points, to a reading of -7.1. This marks the fourth consecutive negative reading for the index but also its highest reading since May (see Chart). Nearly 30 percent of firms reported declines in activity this month, exceeding the 22 percent that reported increases. Indexes for new orders and shipments remained negative. The new orders index improved one point, while the shipments index fell 3 points.
Labor market conditions at the reporting firms deteriorated slightly this month. The current employment index, at -8.6, remained near its reading in the previous month. The percent of firms reporting decreases in employment (15 percent) exceeded the percent reporting increases (7 percent). Firms also indicated fewer hours worked this month: The average workweek index increased 3 points but posted its fifth consecutive negative reading.
There's nothing good in here. As a reminder, these are diffusion indices, so to register improvement you need a positive number. While the rate of deterioration slowed, detrioration continued everywhere except in prices received and prices paid -- and the latter is bad, not good when it is increasing.
With employment and workweek both in decline the impact on the consumer is assured. This marks the fourth month sequentially; even if we were to see improvement in the index next month these indicators tend to have a three to six month leadtime which means that very-visible economic deterioration will be evident right in front of the election.
Nothing in this report changes my expectation that a "formal" recognition of recession happens in the 4th quarter -- but the real impact on the real income of real people, along with the business impact, is now.