Last night in The Closer, we discussed the huge divergence between regional Fed manufacturing activity indices and the ISM Manufacturing Index. In the chart below, we’ve created a proxy for the ISM Manufacturing Index by averaging sub-indices from various regional Fed manufacturing surveys. The result is generally well-correlated to ISM, but over the last few months the two have diverged wildly. While the Five Fed indices from the New York, Philadelphia, and Richmond Fed districts would indicate an ISM reading in the mid-50s, the actual readings have been deteriorating dramatically. Of course, these three Fed districts are a relatively small snapshot of the overall national economy, but collectively their sample size is similar to the ISM’s. It’s hard to say which is “right”, but the huge divergence is certainly noteworthy.  Start a two-week free trial to Bespoke Institutional to stay up-to-date on all the latest developments in global financial markets and economics.