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A manufacturing slow-down is ahead, based on the orders-to-inventory ratio, and the extent of this slow-down will depend on who you talk to.

David Rosenberg has warned that recessions have followed current U.S. orders-to-inventory levels 75% of the time historically. Deutsche Bank expects U.S. manufacturing activity to contract in the months ahead.

Today Europe's PMI manufacturing index hit a seven month low and Goldman Sachs' Adrian Paul expects a continued slow-down for both the U.S. and Europe:

Goldman Sachs:

Given that the respective ratios of orders-to-stocks tend to lead movements in the headline Manufacturing PMI and the Manufacturing ISM, the chart suggests that – in line with what our colleagues in the US expect - sentiment is set to deteriorate faster in the US than in the Euro-zone.

Chart

To be sure, the headline purchasing managers index in both the US and the Euro-zone declined in September, but while the orders-to-stocks ratio in the US ISM continued to fall sharply, this ratio’s decline in the Euro-zone has been more muted in recent months.\