US September ISM manufacturing PMI 49.0 vs 47.8 expected
<ul><li><a href="https://www.forexlive.com/news/us-august-ism-manufacturing-pmi-476-vs-470-expected-20230901/" target="_blank" rel="follow">Prior </a>report 47.6</li><li>Prices paid 43.8 vs 48.6 expected. Last month 48.4</li><li>Employment 51.2 vs 48.3 expected. Last month 48.5</li><li>New orders 49.2 vs 46.8 prior</li><li>Inventories 45.8 vs 44.0 prior</li><li>Production 52.5 vs 50.0 prior</li></ul><p>I've been writing for awhile about green shoots in manufacturing and that's increasingly showing up in the data now. There has been an outright recession in manufacturing over the past year but inventories have gotten extremely lean and demand has held up better than feared. There's a very good argument that manufacturing will be a source of strength in the US economy next year.</p><p>Comments in the report.</p><ul><li>“In the evolving supply chain environment, customers are
increasingly taking an active role in initiating new projects, looking
for cost reduction opportunities and lead-time mitigation, with a
growing emphasis on collaboration. Post-pandemic, customers have learned
they need partners to navigate rough waters.” [Computer &
Electronic Products]</li><li>“We need to coordinate very closely with suppliers in order to yield
a more cost-competitive offer. More back and forth is needed to reach a
reasonable total price.” [Chemical Products]</li><li>“Orders and production remain steady, and we are maintaining a
healthy backlog. Continued inflation and wage adjustments continue to
drive prices up, although we should get some relief from the markets
stabilizing.” [Transportation Equipment]</li><li>“Cost increases are now generally isolated to specific commodities
rather than blanket increases due to ‘inflation.’ ” [Food, Beverage
& Tobacco Products]</li><li>“Markets remain soft. Our customers have about-right inventory
levels, but they paid more due to pandemic cost increases. Everyone is
holding off on increasing inventories, hoping they can buy at lower
costs.” [Apparel, Leather & Allied Products]</li><li>“Overall, things continue to be very steady: Sales and revenue are
as expected, and the supply environment has stabilized greatly versus
2021-22. Some things to watch include the Panama Canal (drought),
U.S.-China relations, and the impact the UAW (United Auto Workers)
strike could have on suppliers of ours who support automotive
production. But overall conditions feel stable.” [Miscellaneous
Manufacturing]</li><li>“Cement negotiations have changed, with cement mills no longer
offering annual or guaranteed pricing. We now want to contract more as a
commodity, leaning toward quarterly, with fluctuating prices yet to be
determined.” [Nonmetallic Mineral Products]</li><li>“A recession feels imminent. Money continues to be pushed into the
bank markets, driving inflation rates really high. Most plants are
buying less material or reducing consumption in the name of
sustainability, as well as running at 80 percent of capacity. Prices of
some products may increase for the upcoming winter weather.” [Petroleum
& Coal Products]</li><li>“Business conditions and market demand remain strong. We are
projected to be at capacity in the next 12 months.” [Primary Metals]</li><li>“New business development is coming onboard. However, many forecasts
are set for the beginning of 2024. Hiring and retaining quality people
is still a struggle.” [Textile Mills]</li></ul><p>The bolded comment is an interesting one. The fall in prices paid is really hard to understand given oil prices but there might be something bigger at work.</p>
This article was written by Adam Button at www.forexlive.com.
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