Following China's miraculous PMI jump back into expansion, Markit reports US Manufacturing also rose to 51.5 in March (despite the biggest drop in manufacturing jobs since 2009). As Markit details, output growth is unchanged from February’s 28-month low, and prices charged decline amid further drop in input costs. ISM Manufacturing also jumpedfrom 49.5 to 51.8 - the first 'expansion' in 7 months. Finally, we note that ISM Prices Paid exploded higher (from 38.5 to 51.5) - the biggest jump since Aug 2012.
"V"-shaped recovery in ISM Manufacturing
ISM Prices Paid saw the biggest 2 month spike since June 2009....
All of which occurred as the manufacturing sector lost more jobs in March than at any time since 2009...
Every ISM Respondent thinks everything is awesome...
- "Unemployment rate is low in our county, making it hard to find workers. We are understaffed and running lots of overtime." (Plastics & Rubber Products)
- "Business in telecom is booming. Fiber plant is at capacity." (Chemical Products)
- "Current trends remain steady. No issues with delivery or costs." (Computer & Electronic Products)
"Capital equipment sales are steady." (Fabricated Metal Products)
- "Requests for proposals for new equipment [are] very strong." (Machinery)
- "Government is spending again. Have received delivery orders." (Transportation Equipment)
- "Things are starting to pick up. Our business is seasonal and it is that time of year." (Printing & Related Support Activities)
- "Business conditions are stable, little change from last month." (Miscellaneous Manufacturing)
- "Incoming sales are improving." (Furniture & Related Products)
- "Our business is still going strong." (Primary Metals)
Full ISM Breakdown..
But as Markit details, output growth is unchanged from February’s 28-month low, and prices charged decline amid further drop in input costs:
“March’s survey highlights sustained weakness across the US manufacturing sector, meaning that overall growth through the first quarter slowed to its lowest since late-2012. Subdued client spending patterns within the energy sector, ongoing pressure from the strong dollar, and general uncertainty about the business outlook were cited as factors weighing on new order flows in March.
“Meanwhile, price discounting strategies resulted in the first back-to-back drop in factory gate charges for around three-and-a-half years, suggesting another squeeze on margins despite lower materials costs across the manufacturing sector."
So - to summarize, US manufacturing sector lost mopre jobs in March than at any time since 2009 BUT the managers that were surveyed by ISM and Markit proclaimed expansion is back and this puts all the pressure back on The Fed once again as more excuses are lost for hiking rates.
One more thing... we've seen this pattern before...