The last two months have seen a major divergence between PMI and ISM Manufacturing reports (as the former confirmed today at its lowest final print since September). May’s final print of 52.7 was slightly above expectations and the preliminary print.
This is the lowest ‘final’ print for US Manufacturing PMI since September (while ISM rebounds)…
This follows China’s Manufacturing PMI ‘contraction’ overnight…
US New order levels increased again in May, although the rate of expansion was the least marked recorded since September 2016. This was mainly linked to subdued client demand.
And in line with China weakness, some manufacturers also cited weak export sales, as highlighted by a slower upturn in new work from abroad than that seen in April.
Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Manufacturing growth momentum continued to ebb in May, down to its weakest since just before the presidential election.
“Manufacturing output, order books and employment all grew at only modest rates as sluggish sales prompted firms to scale back hiring.
Exports sales remained especially lacklustre, hampered in part by the relatively strong dollar. The survey also brought signs of companies becoming more cautious about holding inventory.
“Factories’ raw material prices meanwhile rose at a sharply reduced rate, which should at least help take pressure off profit margins and also feed through to weaker pressure on consumer price inflation.”
Just another broken brick in the wall of ‘soft’ data post-trump hope.