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 with geopolitical issues uppermost in managers’ minds.
US manufacturing activity slowed in June to below-average levels. According to the latest Institute of Supply Management (ISM) survey, its Purchasing Managers Index recorded a reading of 51.7, down from May’s reading of 52.1 but above the market’s expected figure of 51.0. The average reading since 1948 is 52.9, so the latest reading can be described as being under the long-term average.
ANZ economist Kishti Sen said the report indicated tariffs had complicated life for businesses. “Respondents frequently cited tariffs as an issue, noting havoc with supply chains and how they were affecting planning and forecasting. Mexican tariffs, which haven’t gone ahead, were also cited. With talks now back on with China and the Mexican issues resolved there’s a chance sentiment improves from here but new orders suggest activity may not, at least in the near term.”