Millan Mulraine whose work I regularly quote here has published an excellent research note on the pervasive weakness in the manufacturing sector. He notes that all seven regional PMIs are in contractionary territory. He notes that the last two times that happened were in 2009 and 2001. He is not predicting recession but thinks that there is a message in this. Here is a key passage from his note:
The September print of the Chicago PMI report was yet another piece of the regional US manufacturing sector puzzle to confirm this underlying narrative of a struggling sector. The drop in the Chicago PMI index to a sub-50 print now means that all 7 regional manufacturing sector PMIs are in contractionary territory. The last instance of this was in 2009, when the US economy was in an economic recession. Similarly, during the 2001 recession all the regional PMIs were also in contractionary territory. Granted, the manufacturing sector represents only a very small part of the US economy, accounting for less than 10% of total employment and 20% of output. However, to the extent that factory output and manufacturing sector sentiment provide a gauge on domestic demand, the disappointing performance in this sector could be an important indication that all may not be well with the US economic recovery.