Just like earlier in the year, the global recovery is once again on the shoulders of the US. Manufacturing ISM just printed at 55.3, a major beat to expectations of 51.3, and up from 53.5 before. How this meshes with PMI data that is contracting across the globe is irrelevant: just BTFD as America is once again expected to push the world out of the "soft spot" although this time with no QE or fiscal stimulus. Among the various indices, employment mysteriously increased from 58.2 to 59.9 despite consistently weak initial claims and NFP numbers missing expectations, New Orders increased from 51.0 to 51.6 despite a collapse in comparable metrics in recent regional Fed surveys, and prices paid dropped from 76.5 to 68.0, despite ongoing inflationary pressures.
The Institute for Supply Management’s factory index unexpectedly rose to 55.3 in June from 53.5 the prior month, the Tempe, Arizona-based group said today.
Economists projected the gauge would drop to 52, according to the median forecast in a Bloomberg News survey. Estimates of the 77 economists ranged from 49 to 55.
Other figures today showed manufacturing growth is slowing from China to Europe. China’s factory index fell in June to the weakest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the slowest pace in 17 months, while Italy, Ireland, Spain and Greece contracted.
And from the Survey respondents, who oddly see inflation despite the drop in prices paid:
- “We continue to see inflation, though at a reduced rate [compared] to earlier months.” (Chemical Products)
- “Slight slowdown in overall business in both domestic and international markets, although still above 2010 at the same time.” (Electrical Equipment, Appliances & Components)
- “The earthquake and related issues in Japan have caused shortages of some automotive equipment, negatively impacting global automotive production.” (Fabricated Metal Products)
- “Sales continue to be stronger than expected across both retail and industrial channels. Material costs are definitely rising and will force increases to end-use customers.” (Paper Products)
- “High commodity prices continue to be worrisome.” (Food, Beverage & Tobacco Products)
- “Business is still up and down, with no real upside potential for us until the housing market rebounds.” (Furniture & Related Products)
- “Customers are still being cautious with their buying. Certain plastics and metal prices continue to rise.” (Machinery)