"US Manufacturing Survey Indicates Third Consecutive Month of Contraction: Firms Express Concern"
Yesterday's data from regional Federal Reserve Banks presented a mixed picture, with prices once again on the rise, leading to the release of the preliminary October figures from S&P Global's PMIs. The expectations were mixed.
The Manufacturing (47.8 vs 47.3 prior) and Services (55.3 vs 55.2 prior) survey data exceeded expectations (47.5 and 55.0 respectively), as the hard data has been consistently improving over the past month.
Source: Bloomberg
Despite the improvement in the Manufacturing survey, it remained in contraction territory for the third consecutive month.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented on the data:
"Business activity continued to grow at a solid pace in October, sustaining the economic upturn that has been recorded so far this year into the fourth quarter. The October flash PMI is consistent with GDP growing at an annualized rate of around 2.5%.
"Demand has also strengthened, as indicated by new order inflows reaching their highest level in nearly one-and-a-half years, although both output and sales growth were limited to the services economy.
"Sales are being stimulated in part by more competitive pricing, which has helped to drive down selling price inflation for goods and services to the lowest level since the initial pandemic slump in early 2020. These weaker price pressures are consistent with inflation running below the Fed’s 2% target.
However, not all the news was positive...
"Businesses remain cautious about hiring, leading to a third month of modest payroll reductions. Firms are particularly concerned about the uncertainty caused by the Presidential Election.
There is a possibility that the trend towards a Trump victory is beginning to influence the thinking of business leaders...
"More encouragingly, confidence in the longer, year-ahead, outlook has improved as companies hope that a more stable post-election environment will be more conducive to growth. This is especially true in the manufacturing sector, where factories hope that the current soft patch in production and sales will reverse as the uncertainty caused by the political environment passes.”
Given that it's an election month, it should not come as a surprise that the data 'beats' expectations.
"Bottom Line"
The data paints a mixed picture of the US manufacturing sector. On one hand, there's a consistent improvement in hard data and a strengthening demand. On the other hand, the sector remains in contraction for the third consecutive month and businesses are cautious about hiring due to election uncertainties. As we navigate through these challenging times, it's important to keep an eye on how these trends evolve post-election. What are your thoughts on this? Feel free to share this article with your friends. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.
"US Manufacturing Survey Indicates Third Consecutive Month of Contraction: Firms Express Concern"
Yesterday's data from regional Federal Reserve Banks presented a mixed picture, with prices once again on the rise, leading to the release of the preliminary October figures from S&P Global's PMIs. The expectations were mixed.
The Manufacturing (47.8 vs 47.3 prior) and Services (55.3 vs 55.2 prior) survey data exceeded expectations (47.5 and 55.0 respectively), as the hard data has been consistently improving over the past month.
Source: Bloomberg
Despite the improvement in the Manufacturing survey, it remained in contraction territory for the third consecutive month.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented on the data:
"Business activity continued to grow at a solid pace in October, sustaining the economic upturn that has been recorded so far this year into the fourth quarter. The October flash PMI is consistent with GDP growing at an annualized rate of around 2.5%.
"Demand has also strengthened, as indicated by new order inflows reaching their highest level in nearly one-and-a-half years, although both output and sales growth were limited to the services economy.
"Sales are being stimulated in part by more competitive pricing, which has helped to drive down selling price inflation for goods and services to the lowest level since the initial pandemic slump in early 2020. These weaker price pressures are consistent with inflation running below the Fed’s 2% target.
However, not all the news was positive...
"Businesses remain cautious about hiring, leading to a third month of modest payroll reductions. Firms are particularly concerned about the uncertainty caused by the Presidential Election.
There is a possibility that the trend towards a Trump victory is beginning to influence the thinking of business leaders...
"More encouragingly, confidence in the longer, year-ahead, outlook has improved as companies hope that a more stable post-election environment will be more conducive to growth. This is especially true in the manufacturing sector, where factories hope that the current soft patch in production and sales will reverse as the uncertainty caused by the political environment passes.”
Given that it's an election month, it should not come as a surprise that the data 'beats' expectations.
"Bottom Line"
The data paints a mixed picture of the US manufacturing sector. On one hand, there's a consistent improvement in hard data and a strengthening demand. On the other hand, the sector remains in contraction for the third consecutive month and businesses are cautious about hiring due to election uncertainties. As we navigate through these challenging times, it's important to keep an eye on how these trends evolve post-election. What are your thoughts on this? Feel free to share this article with your friends. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.
