Following the weakness in global PMIs, and yesterday's Chicago PMI collapse, US Markit Manufacturing PMI dropped to cycle lows at 51.3 from 52.5 (very slightly better than expectations of 51.2) with job growth at 5-month lows, production at slowest in 28 months, and work backlogs tumbling to the lowest since Sept 2009. Then ISM Manufacturing hit, hovering at its weakest in 7 years rose modestly to 49.5 but remains in contraction for the 5th month in a row (longest streak since 2009). As Markit concludes, "the February data add to signs of distress in the US manufacturing economy."
Remember the "America is an island and the rest of the world's economic collapse doesn't matter" meme... well that is over!! Cycle lows for Manufacturing PMI and 5th month of contraction for ISM Manufacturing
As Output plunges to cycle lows...
While ISM data showed a modest rise, New Orders were unchanged as Import and Export Orders fell.
Of the 18 manufacturing industries, nine are reporting growth in February in the following order: Textile Mills; Wood Products; Furniture & Related Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; and Paper Products.
The seven industries reporting contraction in February — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Computer & Electronic Products; Printing & Related Support Activities; Transportation Equipment; Plastics & Rubber Products; and Fabricated Metal Products
ISM Respondents show a mixed bag:
- "Low oil prices and reduced activity continue affecting our business." (Petroleum & Coal Products)
- "U.S. business demand is solid; international demand is soft." (Chemical Products)
- "Mobility spend is up." (Computer & Electronic Products)
- "Business has to get better. And it appears it is. Healthy backlog for 2016." (Fabricated Metal Products)
- "Very strong demand for product. Material availability very good and commodity pricing continues to be depressed." (Machinery)
- "Airlines are still ordering planes and spare parts for plane galleys." (Transportation Equipment)
- "Market is beginning to trend up with spring season on its way." (Wood Products)
- "Not seeing impact from global economic volatility or oil prices. Business is strong and growth projections remain the same." (Miscellaneous Manufacturing)
- "Orders are coming in stronger than expected." (Furniture & Related Products)
- "Still a bit sluggish." (Food, Beverage & Tobacco Products)
Commenting on the February manufacturing data, Chris Williamson, chief economist at Markit said:
“The February data add to signs of distress in the US manufacturing economy. Production and order book growth continues to worsen, led by falling exports. Jobs are being added at a slower pace and output prices are dropping at a rate not seen since mid-2012.
“The deterioration in the manufacturing sector’s performance since mid-2014 has broadly tracked the dollar’s rise, which makes US goods more expensive in overseas markets and leads US consumers to favour cheaper imported goods.
“With other headwinds including the downturn in the oil sector, heightened uncertainty due to financial market volatility, global growth worries and growing concerns about the presidential election, it’s no surprise that the manufacturing sector is facing its toughest period since the global financial crisis.”
Charts: Bloomberg