Those expecting a complete collapse in the Manufacturing ISM, on par with yesterday's slide in the Chicago PMI, will have to wait some more before the complete devastation in the US manufacturing sector sends stocks into the stratosphere. Moments ago the ISM Manufacturing report for April was released [4], printing at a headline of 50.7, down from 51.3 and the lowest print since December 2012. The good news: it was still above 50 and beat expectations of a 50.6 print by the smallest amount possible. The bad news: it is sliding fast. The worst news: the Employment Indicator, which came at 50.2, down 4 on the month, was the lowest since November, tied with the biggest sequential drop since 2008 in absolute terms, and the biggest drop in percentage terms since the Great Financial Crisis. Judging by the stock market response, the news is not as bad as needed to send the S&P to over 1600, at least not just yet.
[5]
Headline ISM:
[6]
Employment ISM:
[7]
From the report:
The PMI™ registered 50.7 percent, a decrease of 0.6 percentage point from March's reading of 51.3 percent, indicating expansion in manufacturing for the fifth consecutive month, but at the lowest rate of the year. The New Orders Index increased in April by 0.9 percentage point to 52.3 percent, and the Production Index increased by 1.3 percentage points to 53.5 percent. The Employment Index registered 50.2 percent, a decrease of 4 percentage points compared to March's reading of 54.2 percent. The Prices Index registered 50 percent, decreasing 4.5 percentage points from March, indicating that overall raw materials prices remained unchanged from last month. Comments from the panel indicate a range of strong/steady growth, to flat/declining volumes, depending upon the particular industry."
Commodities Up in Price
- Caustic Soda; Corrugated Boxes (9); HDPE (4); Lumber (4); Natural Gas; Plastic Resins (3); and Polypropylene (6).
Commodities Down in Price
- Aluminum; Steel; and Steel — Cold Rolled.
What the respondents are saying:
- "Business can be described as flat at best." (Food, Beverage & Tobacco Products)
- "Production is still strong; several new projects to support alternative energy." (Primary Metals)
- "Slight uptick in business, but overall continuing slowdown in defense due to budget/sequester." (Computer & Electronic Products)
- "We have concerns about safety of doing business in South Korea. Our largest customer and part owner is in South Korea." (Electrical Equipment, Appliances & Components)
- "Automotive demand remains firm." (Fabricated Metal Products)
- "Business continues at a steady pace." (Machinery)
- "General business conditions and industrial markets remain strong." (Transportation Equipment)
- "Seasonal pick-up underway in the office furniture industry." (Furniture & Related Products)
- "Market has slowed this month — weather in some parts of the country, also customers built inventory in anticipation of building increase, but the economy is still slow to pick up this spring." (Wood Products)
- "Overall, volume is steady or slightly declining. Q1 sales volume is lower than projected." (Chemical Products)
Source [4].
Construction Spending was dismal - 3rd miss in last 4; biggest 3-month drop in 26 months, and lowest spend since Auguest 2012...
[8]
But apart from that housing's doing great...