Manufacturing PMI Plunges To 7-Month Lows: Orders Tumble As Prices Soar

Following a slight bump in EU Composite PMI this morning, US Composite PMI dipped in June (preliminary) data driven by a slump in manufacturing.

While Services PMI slipped lower, Manufacturing plunged to its weakest since Nov 2017.

More worrisome is that Stagflation is here -  New Orders tumbled to the lowest since September and inflation spiking with input costs at their highest since Sept 2013.

US continues to outperform according to the soft data surveys...

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

Price pressures remain elevated, however, widely blamed on a mix of rising fuel prices and tariff-related price hikes, as well as supplier’s gaining pricing power as demand outstrips supply for many inputs.

“Risks are tilted to the downside for coming months. Business expectations about the year ahead have dropped to a five month low, led by the weakest degree of optimism for nearly one and a half years in manufacturing. Exports are back in decline, showing the worst performance for over two years, causing factory order book growth to slump sharply lower compared to earlier in the year.

For the first time this year, factory output is growing faster than order books, suggesting production may be adjusted down in coming months. Inflows of new business into the service sector have meanwhile cooled to the weakest since January. Finally, although employment is still rising strongly, even here there are signs of weakness, with the latest rise in payrolls being the lowest for a year.”

So surging prices are crushing orders and production is continuing to ignore it.. for now. That won't end well.

Comments

KarlGDenninger Fri, 06/22/2018 - 10:01 Permalink

Dude im seeing crap rise in price every week at the grocery store. Everywhere...my cost of living went 19% from last year (taxes, insurance, etc) I cannot believe the official CPI is at 2 or 3%. What kind of crack is the fed smoking. 

 

 

Im starting to see people who make 45-55k barely getting by

east of eden KarlGDenninger Fri, 06/22/2018 - 10:23 Permalink

It's not just your country, the same thing is happening here, as well, but not so severely. None the less, my weighted average inflation, based on my pension income is rising at 6.623% year over year, while the government wants to tell me that no, inflation is really only 1.7%. BULL FUCKING SHIT.

My favourite inflation indicator has always been toilet paper. Over the decades, whenever the prices of paper products (Kleenex, t.p. etc) went ballistic, it always signalled high inflation and the end of the expansion. I don't think this time is going to be any different, because when I went shopping yesterday, I saw that a carton of 6 puny Kleenex boxes (down from a 200 count 1 year ago, now at at 120 count, per box), is going for $ 9.99, which of course is outrageous. When you factor in the smaller size and the higher price, the increase in prices come out to a whopping 65% at the retail level. 

But when you consider that Mr. Trump's softwood tariffs have ballooned the cost of 1,000 board feet of softwood by 250% from 220.00 US to 630.00 US, then you begin to get the idea about what is going on. I suppose that much of the paper products are made from the cuttings and sawdust that comes from the softwood milling operations.

Trump's tariff's have not helped the economy, they have fucking screwed you and Louie, right up your arses, and he wants to do more. 

I said when Trump got elected that he was there to 'pick the bones on the carcass', and that is exactly what he, and Wylbur, are doing.

Games over folks. end of the line.

In reply to by KarlGDenninger

KarlGDenninger east of eden Fri, 06/22/2018 - 10:30 Permalink

The fuck you talking about I agree with the first part of your response but I have issue's with the last part.

 

Prices had been surging under Obombo, constantly. He did nothing about it. No tariff's do not help..but they are LONG overdue. But last I checked, America Manufactures way...way...more than enough food to feed itself. this is clearly the currency weakening and not Tariff related.

In reply to by east of eden

east of eden KarlGDenninger Fri, 06/22/2018 - 10:34 Permalink

But, you currency has strengthened from 89.5 to 94.5 in just the last couple of weeks.

Of course it is related to tariffs, schmuck.

And of course you are going to have 'issues' when I slag your 'Grande Orange'. It is to be expected.

You see, the thing that people with little pea brains don't understand is that you are not going to 'rebuild' your manufacturing base in 4 years, you won't even rebuild it in 20 years, it will take a generation, so applying punitive tarrifs willy nilly is just going to get you massive price increases in the short and medium terms, and that is exactly what is happening.

It's going to get really interesting when your dollah finally gets shown the door.

In reply to by KarlGDenninger

Dewey Cheatum … east of eden Fri, 06/22/2018 - 11:28 Permalink

As painful as it is..we gotta start somewhere. The US must return to a net producer nation. PERIOD.

Because past admins have allowed this to get so far out of balance ie. "new normal"..the greater the pain suffered.

When the G7 ganged up on Trump..their united message was this; "we will never be able to tolerate, not being allowed to cheat our trade agreements.

when you have no push back on these issues for a DECADE' there will be mass hysteria returning back to the agreements that they signed. PERIOD.

In reply to by east of eden

CashMcCall Dewey Cheatum … Fri, 06/22/2018 - 11:43 Permalink

Merchantilist nonsense. 

So let's go back to the USA in their Net producer era. Smoot Hawley was your dream come true. They had Tariffs on 20,000 products. The Republicans and Hoover were going to save the USA from Recession. After the retaliatory tariffs were applied by other nations, the USA sank from a recession to a Depression that lasted 15 years. It was a total bust. 

That is why 1140 Economists and 14 Nobel laureates sent a letter to Trump and the Congress warning that Tariffs would harm the economy. They even included the 1028 Economist who sent a letter to Hoover and the Congress saying exactly the same thing about Smoot Hawley. So Trump ignored over 2000 Economist. Because like you, when in doubt always take the Unschooled moron approach. You Trumptard are crap heads. 

Painful... the Socialist Mantra that pain and suffering and Sacrifice are good for the Socialist State, the public good, the NEOCON GOOD the Religious RIGHT GOOD. Every scam ever perpetrated against mankind began with a plea for Sacrifice. 

 

Capitalism says you either compete or you are gone without a single tear shed. 

 

In reply to by Dewey Cheatum …

CashMcCall Dewey Cheatum … Fri, 06/22/2018 - 11:57 Permalink

How is that? If I invent a cure for cancer and make my drugs in the North Pole and distribute them through Africa, how do I lose my sovereignty? The only way I lose my sovereignty is if I come to Merica and face the EPA, the FDA, the IRS, and the most litigious society on earth. If I made my drug in Merica, I would be ridiculed for charging too much, not having daycare for my employees and diversity lawsuits every second. I would have to pay FICA, Social Sec taxes, Obamacare for every employee. No thanks. Merica lost its manufacturing base long ago and it had nothing to do with China or Europe or Canada or anyone else. 

Trump has only reinforced the instability of US Businesses with his meddling. 

 

US manufacturing is down to 14% of the GDP and shrinking. 

 

In reply to by Dewey Cheatum …

Roadwarrior east of eden Fri, 06/22/2018 - 11:00 Permalink

We either get fair trade for our companies at home and stop the stealing of intellectual property from China or watch our country go down the drain slowly. I'll gladly pay more to try to get free trade. If not build the shit here, tariff anyone who is F us over. Big Tariffs, not this little shit, no more playing. Maybe the stupid Americans will start living within their means.

   

In reply to by east of eden

CashMcCall Roadwarrior Fri, 06/22/2018 - 11:29 Permalink

Trumptards and their endless stale China bashing and calls for Socialism price fixing. 

 

You have Trump blowing off that the Chinese are Currency Devaluers but here is Trump applying Tariffs and devaluing the Yuan next to the Dollar. Trump makes no sense at all. He is just a wall of unschooled ego. The Yuan and virtually all emerging market currencies are being devalued against the Dollar which is rising on geopolitical concerns. Trump has already defeated his own tariffs. Tariffs imposed by the buying country, always devalue the exporting country's currency. 

PAY ATTENTION STUPID:  IF Tariffs were a good idea then Smoot Hawley would have been a massive success and fixed all your sea of tears over your unschooled trade claims. instead, it was an abysmal failure that converted a recession into the Great Depression lasting 15 years!

Tariff have failed every time they were tried. If Tariffs worked then Nixon would be perceived as a genius instead of driving the country into a massive recession. If they had worked "W" Bush would have already corrected all the woes of the US Steel making industry instead of causing the demise of 40% domestic steel capacity and the loss of 200,000 jobs for steel fabricators using imported steel. It was a bust stupid!

 

I will go one step further. The actual term Trade Deficit is what happens after a transaction occurs. For example, you buy a Japanese car and you pay US Dollars. The exchange is fair and both sides of the exchange are satisfied. NO ripoff as Trump alleges. But after the transactions occur the buying currency is supposed to be reduced incrementally and the selling currency is supposed to be increased incrementally. That is what would happen in a free market. But the opposite happens. The High Dollar policy of the US keeps the dollar moving higher and the Japanese Yen devalues to remain competitive. Thus the Trade Deficit is a way of quantifying the US Dollar's failure to market adjust. While it is a negative number that simply means the US consumers got products for less than a free market exchange. This also allows the US to export its inflation. 

I am stunned that Economists, in particular, allow Trump to imply there is a dollar deficiency on the imported goods. Trump is misusing the term as if it demonstrates indebtedness. Nothing could be further from the truth. In fact, the Deficit of payment only results when the Dollar is used to buy foreign goods. If the Yuan was used, there would be a relative parody. Trump is dangerously ignorant and you're his brainless parrot. 

Your mantra and tearful refrain of sacrifice on behalf of Marxist Labor mean nothing to me. I will sacrifice nothing for some union slob sitting at the bar expecting me to pick up the tab so he can have a cushy life. If you can't make it in a competitive world then don't roll out your Special Olympics Socialist appeal. It sounds pathetic.

In reply to by Roadwarrior

snblitz east of eden Fri, 06/22/2018 - 14:31 Permalink

(sorry to my metric friends for my use of SAE or Imperial units)

homedepot.com: 

  • products in 1 gallon containers now contain 0.9 gallons
  • products in 5 gallon containers now contain 4.75 gallons
  • products in 128 oz containers now contain 121 oz

Not all products, but many.

You want to see something beyond incredible.  Go to homedepot.com and search on any redwood product.

 

In reply to by east of eden

MuffDiver69 Fri, 06/22/2018 - 10:03 Permalink

Exactly why you go for it on the trade balance right now. Easy to be a commenter and never have to present any ideas on how to fix a situation that can’t last. Everything happening was predictable and the doom and gloom crowd will have their click bait...so glad so many of the schmucks I worked for in the brokerage industry for decades are seeing their little world fall apart.

CashMcCall boostedhorse Fri, 06/22/2018 - 11:18 Permalink

Look at my post below stupid. I only addressed the Orange Ceasar's brilliant solar panel TARIFFS! 

Also Trillions in futures contracts were voidable under Force Majeure the minute Trump put his Steel and Aluminum tariffs on China and the Allies. 

Smoot Hawley the same thing happen. Listen dumb shit if Tariffs had worked then Smoot Hawley would have been a smashing success and all the trade problems you claim would be fixed. Instead, it was an abysmal failure converting a recession into the great depression. 

And if Tariff had worked then your NEOCON poster boy "W" Bush would be regarded as a genius that fixed the domestic steel industry. Instead Bush destroyed 200,000 jobs in the imported steel fabrication industry. And Domestic steel production lost 40% of its capacity to bankruptcy. 

My question is why are you TrumpTards so stupid you can't get any of this? Are your math skills that bad? Did you spend the last month drunk at a NASCAR race? You don't think. No understanding of history. 

It's all going down now because of the Orange Grifter. 

 

In reply to by boostedhorse

Seasmoke Fri, 06/22/2018 - 10:13 Permalink

I would skip the stagflation period and move right to hyperinflation. The people get much angrier during stagflation and explode during Hyperinflation.

 

Good Luck Janet Powell !! I would give home addresses and GPS directions of Greenspan, Bernanke and Yellen if I were you. 

CashMcCall Fri, 06/22/2018 - 11:10 Permalink

The Monkey Wrench Just Took down the Orange Caesars bullshit. Manufacturing at a new five year low. Orange Ceasar is worse at this than that Black Messiah and Obama knew nothing. LOL. 

Remember Trump's solar panel Tariffs. He was going to fix the Solar Panel business and make it a powerhouse. Turns out 80% of the solar panel components are made in China or through the Chinese supply chain of a half dozen Asian nations. 

Yesterday Musk said SolarCity was in trouble and Tesla was closing 12 facilities in 9 states. Solar is basically a bust but the Orange Caesar was going to make it roar. LOL. 260,000 jobs are on the way out. Way to go Orange moron. 

But but but Trade wars are good and easy to win... LOSER