Tuesday brought the Manufacturing ISM Report on Business, and it was tied with the weakest readings since the middle of 2013. PMI came in at 51.1%. Bloomberg was calling for 52.8%, after a 52.7% reading in July. Dow Jones, via the Wall Street Journal, called for a reading of 52.7%. In short, what was expected to be a tiny uptick was in actuality a fairly sharp drop.

To put this lower miss in context, the 51.1% reading was worse than all economist expectations. Bloomberg had a range of estimates from 51.5% to 54.0%.

Of the components, new orders, production and employment were listed as growing. The supplier deliveries component was listed as slower, and the inventories were labeled as contracting.

About the only good news that can be derived from this report is that the general economic activity in the manufacturing sector was still in expansion territory, above the 50.0% barometer — above represents growth and below represents contraction. August’s growth reading was the 32nd consecutive month, and the overall economy grew for the 75th consecutive month, according to the supply executives.

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Of the 18 manufacturing industries, 10 of the sectors reported growth in August. These included, in the following order:

• Textile Mills
• Furniture & Related Products
• Paper Products
• Nonmetallic Mineral Products
• Chemical Products
• Food, Beverage & Tobacco Products
• Miscellaneous Manufacturing
• Fabricated Metal Products
• Plastics & Rubber Products
• Machinery

The six industrial sectors reporting contraction in August were (in order):

• Apparel, Leather & Allied Products
• Primary Metals
• Electrical Equipment, Appliances & Components
• Petroleum & Coal Products
• Computer & Electronic Products
• Transportation Equipment

The Institute for Supply Management said of the August ISM manufacturing report:

The August PMI® registered 51.1 percent, a decrease of 1.6 percentage points from the July reading of 52.7 percent. The New Orders Index registered 51.7 percent, a decrease of 4.8 percentage points from the reading of 56.5 percent in July. The Production Index registered 53.6 percent, 2.4 percentage points below the July reading of 56 percent. The Employment Index registered 51.2 percent, 1.5 percentage points below the July reading of 52.7 percent. Inventories of raw materials registered 48.5 percent, a decrease of 1 percentage point from the July reading of 49.5 percent. The Prices Index registered 39 percent, down 5 percentage points from the July reading of 44 percent, indicating lower raw materials prices for the 10th consecutive month. The New Export Orders Index registered 46.5 percent, down 1.5 percentage points from the July reading of 48 percent. Comments from the panel reflect a mix of modest to strong growth depending upon the specific industry, the positive impact of lower raw materials prices, but also a continuing concern over export growth.

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Stocks were already handily lower on Tuesday on the heels of weak purchasing manager data out of China. Somehow, some way, there was a surprise that the reading was so negative. Perhaps that drop in the Shanghai SSE index over growth concerns wasn’t a good enough warning. Yes, there is some sarcasm there!

The S&P 500 Index was down 40.59 at 1,931.59 and the Dow Jones Industrial Average was last seen down 353 points or so at 16,174.33.

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