US Manufacturing Drops (Or Rises) In January As New Orders, Jobs Plunge (Or Surge)

US Manufacturing, according to Markit, is at its strongest since March 2015 (as Services hits a 9-mo low) helped by strong new orders, employment, and output.

However, according to PMI, Manufacturing slipped to 59.1 with a tumble in New Orders.

Take your pick...

 

However, one small fly in the exuberant Markit PMI ointment is that for the thirteenth month running, vendor performance deteriorated as capacity pressures at suppliers led to longer lead times. Purchasing activity rose at the quickest rate since September 2014, stretching supply chains, and pre-production inventories accumulated at the fastest pace in twelve months.

Commenting on the exuberant final PMI data for January, Chris Williamson, Chief Business Economist at IHS Markit said:

“US manufacturing started 2018 in fine fettle, with the PMI up to its highest for over two-and-a-half years. Output growth accelerated in response to fuller order books, the latter buoyed by the twin drivers of robust domestic demand and rising exports.

Factory payroll growth remained among the highest seen over the past three years, underscoring the bullish mood evident across the manufacturing sector.

Pricing power is also returning as a result of strengthening demand, which should help bolster profit margins, but is likely to also feed through to higher consumer prices.

“The acceleration of manufacturing growth and upward price trends are grist to the mill for Fed hawks, adding to the likelihood of interest rates rising in March.

However, ISM completely disagreed with PMI, noting a big drop in new orders and employment...

 

Not exactly what PMI suggested...

 

 

But still, for ISM, there was just one negative respondent out of nine...

  • "Sales nationally and internationally are strong in Q1. We are increasing our CapEx spend by 30 percent to 40 percent over [the] previous year." (Chemical Products)
  • "We have heard reports of additional business due to the recent reduction of tax rates." (Machinery)
  • "Business outlook is positive on all fronts right now with our customers. Budgets are being approved for new projects, and component prices from suppliers have temporarily stabilized." (Computer & Electronic Products)
  • "Our usual winter slowdown has not occurred, and we are very busy with new orders." (Furniture & Related Products)
  • "Slow start to 2018; pricing on metals is heading up and quotes/orders are picking up as well." (Fabricated Metal Products)
  • "Overall, business remains steady. With several key programs to begin ramping up in the industry, outlook looks good for calendar year 2018." (Transportation Equipment)
  • "Employment is very tight in our area." (Food, Beverage & Tobacco Products)
  • "Business continues to strengthen." (Paper Products)
  • "Business is starting the new year strong. Consumer confidence seems to be driving a lot of our customers’ order requirements higher." (Plastics & Rubber Products)

Comments

Arnold Thu, 02/01/2018 - 10:23 Permalink

"Our usual winter slowdown has not occurred, and we are very busy with new orders." (Furniture & Related Products)

Odd.
Bed Bath and beyond, Sears, Penny, Macy nearly gone from the scene.
Guess they didn't move many refrigerators or color TVz.

Endgame Napoleon Arnold Thu, 02/01/2018 - 10:45 Permalink

That is great, assuming you employ US citizens in the vast majority of your company's factory floor and other positions. Maybe—shock—small retailers will get an upsurge in sales after the avalanche of big-box store closings, like the small, family-owned furniture store than used to be down Main Street (literally) from the shop I once owned. People in this era do not understand that you build relationships with such small owners, giving you a bit of haggling room, especially when you buy from them over time. They know you. They value the return business. 

Couples starting out can get bargains with small merchants, building up their rooms over time with possibly higher quality furniture, although a lot of it everywhere is made overseas.

But, so many Americans have unsteady, part time or contract employment and low wages. They cannot entertain the idea of purchasing even a few pieces at a full price point.

Still, there are plenty of higher earners in the Gen X and Millennial generations, shirking small merchants, thinking they cannot ever get bargains there. It is just not true. Bargains are just arrived at in small businesses in a different way than in the big-box stores, with their CONSTANT 50%-off sales. The truth is that, on big or medium-ticket items, those ubiquitous big-box “sales” are often deceptive ploys. 

In reply to by Arnold

Endgame Napoleon An Shrubbery Thu, 02/01/2018 - 11:05 Permalink

True.

There are multiple overlaps with that period in the late 19th century to the early 20th century. There was a boom-and-bust stock market then, along with mass immigration to fill the factory floors with child laborers, making pennies, until the immigration-restriction bill of 1924, without which we would never have had a large-scale middle class after WWII. Without that bill, there would have been too many immigrant laborers, chasing jobs, working for low wages and driving wages down to nothing.

In that historical period of mass immigration, they had suing & suicide cultures, mirroring the ones we have today, albeit in different, less organized forms.

I read the autobiography of Sidney Hook, the famous Cold War political scientist. Growing up, he was right in the middle of the mass waves of turn-of-the-century immigration and tenement living.

There was a suicide of a young male every week in his apartment complex, which was crammed full of adults, having no way to achieve a hopeful, dignified, independent life, living crammed into small apartments with their extended families. These young men killed themselves by using the big furnaces at the end of the hallways. Neighbors found them in the mornings. 

Another [nostalgic] element from his description of this former period of mass immigration does not align with the idealization of mass immigration, peddled by progressives, nor with their glorification of so-called “working families.” Moms in these turn-of-the-century immigrant households were often doing factory piecework for a pittance, another trend aligning with today’s Fake Employment scene, where every 1099 gig and six-week temp job job is defined as “employment.” 

Immigrant parents at the turn of the century used to instruct their children to throw themselves in front of horse and buggies, owned by rich people, so that they could collect payments from them. 

Yup. 

In reply to by An Shrubbery

Ink Pusher Thu, 02/01/2018 - 10:40 Permalink

This article is duplicitous, the resulting conversation is pretty much one sided.

Oh wait a minute ,what's that?  

You can't deliver??

Until 2021 ???

Click.

 

luckylongshot Thu, 02/01/2018 - 11:33 Permalink

Comparisons and data are only reliable when the methodology  remains the same. This means the moment they changed methodology was the moment the numbers became meaningless. I guess they did not want to admit to unemployment north of 20% and so stopped being honest. Only a fool would pay any attention to any of the numbers that now come out.

Consuelo Thu, 02/01/2018 - 11:39 Permalink

"Overall, business remains steady. With several key programs to begin ramping up in the industry, outlook looks good for calendar year 2018." (Transportation Equipment) 

"Employment is very tight in our area." (Food, Beverage & Tobacco Products)  

"Business continues to strengthen." (Paper Products)  

"Business is starting the new year strong. Consumer confidence seems to be driving a lot of our customers’ order requirements higher." (Plastics & Rubber Products)

 

I'd be real curious as to where the bulk of these products are actually manufactured, as opposed to booked & entered for official data release... 

Falling Down Thu, 02/01/2018 - 11:54 Permalink

Working in manufacturing, I've seen a huge drop in orders this
month, and a softening in hiring. 

I'll pay close attention over the next couple of month

. Working for a large, and poorly-run corporate conglomerate in '07 and up to Lehman I witnessed the manufacturing collapse in real time, I know the warning signs. Masssive hiring in '07 and even into July of '08, with management telling us right into June
everything was fine, when clearly things were bad.

They went full retard, but it was too late when August and September came and went, and we had too many people. If there's a huge drop or cancellation of orders at big hitters like Boeing in the next six months, start paying really close attention.

William Dorritt Thu, 02/01/2018 - 13:05 Permalink

The rape of the US was almost complete on the day Trump took office.

Turning on US mines, wells, manufacturing, farming etc at least guarantees that the US has enough of an economy to feed ourselves if the hollow dollar is routed in the world market as the last vestige of Breton Woods fades.

In addition to trying to restart the heart of the economy, Trump also has the herculean job of using the totally compromised govt to clean up the totally compromised govt. 94% Dems in DC

Starting with the FBI and DOJ every department must be purged of their chain of command and replaced with retired military and new employees from the free States.

If the FBI and DOJ are bold enough to attempt to railroad the President and his family, how do they treat ordinary citizens ?