Despite drastically tightening financial conditions, ‘soft’ survey data on US Manufacturing was expected to rise in October, but – as always – it was mixed:
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Markit’s Manufacturing PMI printed higher at 55.7 (marginally higher than September’s 55.6 but below the October flash print of 55.9)
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ISM Manufacturing Printed dramatically lower at 57.7 (well below expectations of 59.0 and down from September’s 59.8)
It appears ISM is catching down to reality as ‘hard’ economic data continues to creep lower and disappoint:
ISM Manufacturing is at its weakest since April 2018 (as new orders drop to lowest since April 2017)
While Markit’s Prices Paid index is soaring, ISM’s has been falling recently but prices bounced in October as Export Orders collapsed to weakest since Nov 2016…
So while ISM is a terribly dismal print, Markit is ebullient…
Chris Williamson, Chief Business Economist at IHS Markit said:
“The manufacturing sector saw a strong start to the closing quarter of 2018, with new order inflows rising sharply and business optimism spiking higher in an encouraging sign that firms expect the good times to continue into 2019.
“The increasingly bullish mood was also reflected in one of the largest monthly increases in factory payroll numbers seen over the past seven years as firms grew capacity to meet rising workloads.
“The key area of concern remained tariffs, which were widely reported to have contributed to another month of stalled export sales and a steep rise in prices for many inputs. Average input prices rose at one of the sharpest rates seen over the past six years in October.
“In a clear sign that inflationary pressures are continuing to build, strong customer demand meant firms were often able to push cost increases through to selling prices.
Average prices charged for goods leaving the factory gate consequently jumped to one of the greatest extents seen since mid-2011.”
We suspect ISM is right on this one!!
When does the soft survey data catch down to tightening financial conditions?
Or the ‘hard’ economic data?
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