If anyone needed confirmation that yesterday's soaring Chicago PMI data (to the highest since March 2011) was a typical "Made In Chicago" fabrication, then look no further than today's final MarkIt US Manufacturing PMI, which instead of soaring as its Chicago counterpart, tumbled from 52.8 to 51.8, the lowest print since October of 2012 as the report indicated "only modest improvement in business conditions", "output growth weakest for over four years", and "new orders increasing at the slowest pace since April." Then again, in the New Normal world in which data reports separated by 24 hours are expected to indicate diametrically opposite things, this is quite normal, and if nothing else, absolutely bullish. Why? Who knows, but cratering Manufacturing Output is surely beneficial to the stock market, if not the actual economy.
Broken down by Components:
From the report:
Commenting on the final PMI data, Chris Williamson, Chief Economist at Markit said: “While better than the earlier flash reading, the final PMI data indicate that the U.S. manufacturing sector ground to a near standstill in October. “Encouragingly, it looks like companies are expecting the slowdown to be temporary, most likely linked to the government shutdown, as indicated by an upturn in the rate of job creation.
“However, even the faster growth of employment remains only modest, consistent with barely any increase in official data on manufacturing payrolls. In addition, companies allowed their input inventories to fall at the fastest rate since 2009, highlighting widespread uncertainty towards the near-term outlook.
“The mixed signals from the survey therefore add to the likelihood that policymakers will need to wait for some time, perhaps a few months, until the picture clears as to the true underlying health of the U.S. economy and its ability to create jobs.”
We get it: Chicago is good cop, MarkIt is bad cop whose purpose is to justify the taper delay.
Finally, spot the absolute contradiction between the MarkIt data, and the Chicago PMI euphoria:
Manufacturers linked the slight increase in output primarily to a weaker rise in new orders. Total incoming new work rose modestly and at the slowest pace in six months in October. Panellists commented on greater client demand in both the domestic and international markets. Nevertheless, a marginal increase in new export orders merely reversed a decline in September. Reflective of the weak trend for new orders, the quantity of inputs bought by manufacturing companies fell for the first time in almost three years in October. This was accompanied by the sharpest depletion of stocks of purchases since September 2009. Concurrently, suppliers’ delivery times continued to lengthen, with the latest increase in lead times the greatest for a year-and-a-half.
That's ok: lies, like everything else, are bullish. Which is why we can only hope that today's Manufacturing ISM due out shortly, prints in the triple digits. A lie of that magnitude will surely send stocks to turbo all time highs.