More Bad News Regarding Manufacturing

June 3, 2019

The Institute of Supply Management’s U.S. manufacturing purchasing managers index fell by a further 0.7 index points to a 31-month low in May. Sub-indices for production, supply delivery times, inventories and order backlogs dropped by 1.0, 2.6, 2.0 and 6.7 points. Juxtaposed against a 0.2-point decline in the IHS-compiled Euroland PMI index to 47.7, the spread between those two measures, shown below, narrowed to a 5-month low of 4.4 points.

The bad manufacturing news doesn’t stop there. Purchasing manager indices reported earlier today for a slew of other economies indicated a deterioration of manufacturing sector conditions during May in Great Britain, Japan, Russia, and Switzerland among others, as well as near stagnation in China. Also, the IHS own U.S. purchasing managers index sank 0.5 points to its lowest level in 116 months going all the way back to the earliest days of the current economic upswing. The orders component of that index, moreover had a sub-50 reading for the first time since August 2009, suggesting that industrial production may make a negative contribution to U.S. second-quarter GDP growth.

Other North American economies also experienced more difficult conditions in manufacturing according to other IHS-compiled purchasing manager surveys last months. Brazil’s index dropped to an 11-month low of 50.2, and Mexico¬† straddled the fence between deterioration and improvement with a PMI reading of 50.0. Canada’s PMI stayed below 50, falling 0.6 points to a 35-month low of 49.1.

Today’s data discredit President Trump’s belief that trade wars have winners and loser and that protectionism will strengthen U.S. growth in both the short and long term. Had tariff man paid more attention when he studied economics, he would have known better. U.S. confrontational trade policies are making a loser out of every economy.

Mfg PMIs U.S. Euroland Spread EUR/USD
Jan 2013 53.1 47.9 +5.2 1.330
February 53.1 47.9 +5.2 1.334
March 51.5 46.8 +4.7 1.295
April 50.0 46.7 +3.3 1.301
May 50.0 48.3 +1.7 1.299
June 52.5 48.8 +3.7 1.319
July 54.9 50.3 +4.6 1.309
August 56.3 51.4 +4.9 1.331
September 56.0 51.1 +4.9 1.335
October 56.6 51.3 +5.3 1.364
November 57.0 51.6 +5.4 1.349
December 56.5 52.7 +3.8 1.370
Jan 2014 51.3 54.0 -2.7 1.361
February 54.3 53.2 +1.1 1.366
March 54.4 53.0 +1.4 1.380
April 55.3 53.4 +1.9 1.380
May 55.6 52.2 +3.4 1.374
June 55.7 51.8 +3.9 1.360
July 56.4 51.8 +4.6 1.354
August 58.1 50.7 +7.4 1.332
September 56.1 50.3 +5.8 1.290
October 57.9 50.6 +7.3 1.268
November 57.6 50.1 +7.5 1.247
December 55.1 50.6 +4.5 1.232
Jan 2015 53.5 51.0 +2.5 1.162
February 53.3 51.0 +2.3 1.135
March 52.3 52.2 +0.1 1.083
April 51.6 52.0 -0.4 1.081
May 53.1 52.2 +0.9 1.116
June 53.1 52.5 +0.6 1.123
July 51.9 52.4 -0.5 1.101
August

September

October

51.0

50.0

49.4

52.3

52.0

52.3

-1.3

-2.0

-2.9

1.114

1.123

1.121

November

December

Jan 2016

February

March

April

May

June

July

August

September

October

November

December

Jan 2017

February

March

April

May

June

July

August

September

October

November

December

Jan 2018

February

March

April

May

June

July

August

September

October

November

December

Jan 2019

February

March

April

May

48.4

48.0

48.2

49.7

51.7

50.7

51.0

52.8

52.8

49.4

51.7

52.0

53.5

54.5

56.0

57.6

56.8

55.3

55.5

56.7

56.5

59.3

60.2

58.5

58.2

59.3

59.1

60.7

59.3

57.9

58.7

60.0

58.4

60.8

59.5

57.5

58.8

54.3

56.6

54.2

55.3

52.8

52.1

52.8

53.2

52.3

51.2

51.6

51.7

51.5

52.8

52.0

51.7

52.6

53.5

53.7

54.9

55.2

55.4

56.2

56.7

57.0

57.4

56.6

57.4

58.1

58.5

60.1

60.6

59.6

58.6

56.6

56.2

55.5

54.9

55.1

54.6

53.2

52.0

51.8

51.4

50.5

49.3

47.5

47.9

47.7

 

 

-4.4

-4.8

-4.1

-1.5

+0.1

-1.0

-0.5

0.0

+0.8

-2.3

-0.9

-1.5

-0.2

-0.4

+0.8

+2.2

+0.6

-1.4

-1.5

-0.7

-0.1

+1.9

+2.1

0.0

-1.9

-1.3

-0.5

+2.1

+2.7

+1.7

+3.2

+5.1

+3.3

+6.2

+6.3

+5.5

+7.0

+2.9

+6.1

+4.9

+7.8

+4.9

+4.4

1.076

1.090

1.087

1.111

1.114

1.134

1.130

1.124

1.106

1.120

1.121

1.103

1.078

1.054

1.063

1.064

1.069

1.072

1.106

1.124

1.153

1.182

1.191

1.176

1.174

1.184

1.220

1.234

1.234

1.227

1.181

1.167

1.169

1.155

1.166

1.148

1.136

1.138

1.142

1.135

1.130

1.123

1.118

 


Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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