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 represents a turnaround but calling an end may be premature.
US manufacturing activity rebounded to some extent after having slowed for six consecutive months. According to the latest Institute of Supply Management (ISM) survey, its Purchasing Managers Index recorded a reading of 48.3, up from September’s reading of 47.8 but less than the market’s expected figure of 49.0. The average reading since 1948 is 52.9 and any reading below 50 implies a contraction.
The ISM’s Tim Fiore said, “Overall, sentiment this month remains cautious regarding near-term growth.” Westpac’s Finance AM team described the report as “disappointing”, noting falls in the “prices paid” and “production” sub-indices.
US Treasury yields increased along the curve but more so at the short end. By the end of the day, 2-year Treasury bond yields had gained 4bps to 1.56%, the 10-year yield had increased by 2bps to 1.71% and the 30-year yield finished 1bp higher at 2.19%.