On Wednesday, the Institute for Supply Management (ISM) released its monthly snapshot of US manufacturing in the form of its Purchasing Manager Index. The index reports manufacturers’ activity on a variety of different metrics, creating an overall activity composite for the headline index. In the chart below, we compare the headline index to another series created with two sub-indices of the composite data. Generally speaking, manufacturers report strong activity when new orders are rising faster than inventories. The two series aren’t perfectly correlated, but over time they tend to move together, with the relationship between new orders and inventories typically leading the overall index. As shown in the chart, the New Orders-Inventories spread is at the weakest level since the end of 2012, and is much, much weaker than the headline index. That suggests the recent decline in this measure of manufacturing activity isn’t over yet. Start a two-week free trial to Bespoke Premium to access our interactive economic indicators monitor and much more.