Brahmason's Blog

ISM in June has dropped to 49.7 from May’s 53.5 .

That is in itself real bad because the fall is substantial and because ISM reading below 50 shows contraction .

However the real negative meaning comes from the fact that in the same period manufacturing prices collapsed from 47.5 down to 37 .

What does it mean ? It means that despite the significant drop in prices the demand went down and consequently it means that american purchase power is collapsing .

The job creation is pointing in the same direction .

80.000 jobs is nothing . Remember that american economy needs 280.000 jobs created in a month persistently to confirm a real comeback to normality .

The substantial loss in purchasing power , is caused by this as well as the fact that many of american jobs destroyed by relocation in the higher added value segment are not being recovered and the fewer jobs created occur in distribution and many of them on temporary basis .

The non manufacture ISM has also dropped from its May reading but rests slightly above contraction .

This means that the services maintain a stronger activity than manufacturing at the expenses of bigger imports eased by an overvalued dollar rate , resulting from euro risk situation .

If dollar continues to strengthen with the american economy as weak as it is , there will be a real collapse of world economy sometime between the end of 2012 and the first half of 2013 .

Brahmason

Brahmason@gmail.com