Following disappoint PMIs from around the world, the US decoupling meme took another knock today as Markit PMI printed 53.0 (from 53.8) - its lowest in almost 2 years, led by a plunge in the employment subindex. Weakness was also evident in new factory orders. As Markit notes, "U.S. manufacturing sector continues to struggle under the weight of the strong dollar and heightened global economic uncertainty." On the heels of Milwaukee and Dallas Fed weakness, ISM Manufacturing printed a disastrous 51.1 (vs 52.5 expectations) - the lowest since May 2013. Employment tumbled, as did New Export ordedrs, but unadjusted New Orders plunged to its lowest since 2013, which is a problem given the massive inventory builds that have saved the world in the last few months.
Manufacturing worst since Oct 2013...
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And under the surface it is ugly..
- *MARKIT AUGUST FACTORY EMPLOYMENT GAUGE DROPS TO ONE-YEAR LOW
- *MARKIT AUGUST FACTORY ORDERS INDEX FALLS TO 54.7 FROM 55.4
“August’s survey highlights that the U.S. manufacturing sector continues to struggle under the weight of the strong dollar and heightened global economic uncertainty, but resilient domestic spending and subdued cost pressures are keeping the recovery on track. Reflecting this, new orders from abroad have now fallen in four of the past five months, which represents the weakest phase of manufacturing export performance since late-2012.
“In response to softer growth momentum, manufacturers took a more cautious approach to staff hiring and inventories in August. Stocks of finished goods were depleted for the first time in 2015 so far, and job creation was the weakest for over a year, as some firms sought to realign production schedules with expectations of sluggish growth trends ahead.”
And then ISM hit...and collapsed...
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As non-adjusted New orders collapse to the lowest sicne 2013...
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The breakdown is very ugly...
As respondents noted, hope remains high...
- "Falling crude oil prices are benefiting all resin based purchases as well as positively impacting fuel surcharges for inbound products." (Food, Beverage & Tobacco Products)
- "We are oversold." (Paper Products)
- "Business is still strong but has slowed slightly." (Transportation Equipment)
- "Modest growth slightly ahead of GDP. Optimistic for the remainder of the year as we have little international exposure." (Chemical Products)
- "FX [Foreign Exchange] continues to be a challenge, especially in Europe. Overall though, the mood is fairly upbeat regarding H2 [second half of 2015] as we ramp up for a new product launch." (Computer & Electronic Products)
- "Our business is good due to the increase in commercial construction." (Fabricated Metal Products)
- "Raw metals price decreases will impact our business favorably." (Miscellaneous Manufacturing)
- "Business is guarded but steady. Margins are tight. Markets are very competitive. China is lackluster." (Wood Products)
- "Automotive companies are investing heavily in upgrading their equipment." (Machinery)
- "Business is strong and doing well. Labor continues to be a struggle to find." (Furniture and Related Products)
As New Export Orders collapse into recessionary territory...
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But but but decoupling?!
Charts: Bloomberg
