Following modest drops in UK and EU PMIs (and a mixed picture in China), Markit's US Manufacturing PMI inched higher in September amid schizophrenic collapse in output growth (14mo lows) and surge in employment (9mo highs). ISM, on the other hand, reported that US Manufacturing has not been this awesome since June 2004.
Prices Paid are soaring helping Make Manufacturing in America Great Again
As New Orders jump (but remain well below early 2017 highs...
The surge in prices paid and deliveries stand out...
Just one thing... we have seen these odd outlier spikes in ISM before... right after mega storms...
And they did not end well.
As a reminder, ISM and Markit have seen very different views of the US Manufacturing 'recovery' in recent months, as 'real' economic data has actually collapsed...
While ISM headline seems awesome, at least half of the respondents mentioned problems associated with the hurricanes...
- "Hurricanes causing supply chain and pricing issues." (Chemical Products)
- "Business levels continue [to be] strong; usually by now, a seasonal downturn begins." (Machinery)
- "Energy sector (oil and gas) continues to be strong. Price of oil appears to be beginning to stabilize." (Computer & Electronic Products)
- "We’ve had a very good year and we are forecasting continued strong demand for our product in 2018." (Miscellaneous Manufacturing)
- "Business is strong. However, we are concerned about price increases due to the hurricanes." (Plastics & Rubber Products)
- "We are closely watching the Houston events as many of our production chemicals are produced in the Gulf region. Some tightening of supply and/or price increases expected." (Paper Products)
- "Labor shortages continue to haunt operational capacity both at [the] local plant [level] and up and down the supply chain."(Transportation Equipment)
- "Hurricanes Harvey and Irma will have significant effects on input costs. Disruption in supply chain. Concerns of transportation." (Food, Beverage & Tobacco Products)
- "Hurricane Harvey, and now Irma, have impacted the business (building materials). Increasing sales but also causing significant price increases on input raw materials." (Nonmetallic Mineral Products)
- "Lumber prices starting to drop, and log prices starting to increase. Not the best combination." (Wood Products)
Commenting on the much more 'normal' final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“While the headline PMI remained resiliently elevated in September, despite disruption from hurricanes Harvey and Irma, the details of the survey are more worrying. Output growth was unchanged on August’s 14-month low, and translates into stagnation at best in terms of the official manufacturing output data. Firms’ expectations of future output growth also slipped to a four-month low.
“There was better news on the hiring front, with job creation perking up to a nine-month high. However, with employment rising faster than output, productivity may be slipping.
“Although the hurricanes appear to have made little overall impact on production, supply delays were widely reported and prices for many inputs rose, suggesting some near-term upward pressure on inflation.”
Rather oddly, as Manufacturing output has declined, employment has improved notably...
Of course we are used to signals being completely contradictory in other nations...