US purchasing managers’ indices (PMIs) have been sliding since August 2018, albeit from elevated levels. After reaching a cyclical peak in September 2017, manufacturing PMI readings went sideways for a year before they started a downtrend. The latest reading has continued this trend.
US manufacturing activity has slowed for a fourth consecutive month. According to the latest Institute of Supply Management (ISM) survey, its Purchasing Managers Index recorded a reading of 51.2, down from June’s reading of 51.7 and less than the market’s expected figure of 52.0. The average reading since 1948 is 52.9, so the latest reading has moved a little further under the long-term average. However, a reading above 50 still implies an expansion.
NAB economist Tapas Strickland noted a lack of consensus among respondents in the report. “Anecdotes in the report highlight very divergent conditions; a number noting ‘business is strong’, while an equal number note ‘weakness in end markets accelerating rapidly. Continuing to reduce production based on weakening demand and declining orders’.”