With soft survey data scrambling the macro traders minds currently (China manu good, services crash; Canada bad – despite surging GDP?), all eyes swing to US data this morning with Markit's Manufacturing PMI weaker than July (though beating expectations modestly) with a "renewed stuttering of the manufacturing economy during August." However, for those who need some good news, ISM's survey of the same manufacturing economy saw them the most exuberant since April 2011!
Manufacturing PMI printed slightly above the flash reading of 52.5 but at 52.8, it is well down from July's 53.3. Under the hood, production levels increased at the weakest rate since Brexit (June 2016), and as production weakened, prices surged – On the price front, cost burdens increased at the fastest rate since April and output price inflation was the strongest in three months. Panellists noted that input cost inflation was driven by higher raw material prices, especially steel and electrical components. Firms generally passed these rises on to clients through increased factory gate charges.
But you can ignore all that because ISM's Manufacturing survey exploded higher to 58.8 – above all economists' estimates – to the highest since April 2011…
This surge comes despite a drop in New Orders (and new export orders) and plunge in customer inventories.
Employment, however, spiked to its highest since June 2011.
Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Although still above the 50 ‘no change’ level, the decline in the PMI shows signs of a renewed stuttering of the manufacturing economy during August. The latest reading indicates one of the weakest improvements in the overall health of the sector seen over the past year, and translates into disappointing signals for comparable official data.
“The survey brings more encouraging signs of improved domestic demand, however, with orders for both consumer goods and investment goods such as plant and machinery on the rise, boding well for the wider economy to continue to expand as we move through the second half of 2017.”
Additionally, Williamson warns…
“The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth.
It appears so…
via http://ift.tt/2iNiDKo Tyler Durden