Boockvar on Manufacturing, Job Openings Data, Rates
The following is from Peter Boockvar:
US mfr’g recovery continues but challenges exist/Job openings data helps to lower rates
The August ISM manufacturing index fell 1 pt m/o/m to 54.6 and below the estimate of 55.2 but still continuing the run of above 50 prints and highlighting the recovery in manufacturing that is global.
New orders fell 3 pts but still above 50 at 53.7. Backlogs slipped too by 3.2 pts to 51.8. Inventories were above 50 for a 3rd month but down .6 pts to 50.6. Customer inventories remain low at 42.8 but up 2.1 pts m/o/m. Export orders were little changed at 53.2 but above 50 for the 3rd month in the past 4. I highlighted this morning that exports helped the manufacturing indices overseas as well.
Supply chain issues remain as the Supplier Deliveries component at 59.3 is well above 50. These were some respondent comments highlighting the problem::
“Supply chain situation, especially in the electronics market, is going through another crisis even bigger and more complicated than during and post COVID-19. That’s mainly due to AI infrastructure and uncertainties in the global market (for oil and other critical supplies) due to war in the Middle East and more complication on trade rules.” [Computer & Electronic Products]
“Supply markets are increasingly challenging due to inflation and supply availability. Each month has been more difficult than the previous one. Starting to resemble the post-COVID-19 disruptive period.” [Computer & Electronic Products]
“Photonics, high speed connectors, semiconductors and government orders are expanding significantly. Supply chains domestically and globally are difficult, with increases in lead times and cost.”[Machinery]
“Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy. Despite these tensions, we continue to focus on what we can control, and the market for our products remains strong.” [Miscellaneous Manufacturing]
Prices paid were unchanged but at still elevated 71.1 and 15 of 18 industries reported paying higher prices. No one paid less.
Finally component wise, employment was above 50 for a 2nd straight month at 51.2, down 1.6 pts, after a long stretch below 50. Only 7 of 18 industries though reported an increase in hiring.
Breadth wise, it didn’t change much m/o/m as 15 industries saw growth, the same number seen in July. Two saw a contraction in their business (wood products and chemical products) vs one in July.
Bottom line, the manufacturing recovery is here but it ain’t easy according to what the respondents have said. Here were some more comments:
“The economy is annoying; it is getting in the way of otherwise good business. We are making great new products but struggling to compete when prices escalate due to things like tariffs and the conflict in the Strait of Hormuz. I fear that the inflation caused by these factors will lead to lower sales and lower spending power of our customers. Call it inflation! At some point, it leads to an economic downturn or at least an economic pain for many consumers. It’s an uncertain year, our second in a row.” [Chemical Products]
“For our building products division, profitability is not far off from last year despite economic headwinds, as our specialty products have maintained their market share and sales. Specific to IT, the rising costs in component inputs have caused some budgetary constraints as we plan for the 2027 fiscal year. However, we largely been able to keep costs close to historic consumer price index averages.” [Chemical Products]
“Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy. Despite these tensions, we continue to focus on what we can control, and the market for our products remains strong.” [Miscellaneous Manufacturing]
“This month is a blur: Steel prices continue to climb as supply diminishes, aluminum is rising after dropping, and there are many holes on the plate side. Demand seems to be a seesaw. Our prediction ability continues to diminish, with the exception that the year will remain difficult until the end.” [Primary Metals]
“High steel and aluminum prices (due to Section 232 tariffs) continue to make profitability a challenge. Uncertainty over the U.S.-Mexico-Canada Agreement is at the forefront of many customer conversations. Our industry has also been hit with countervailing and anti-dumping penalties, further raising the cost of equipment.” [Transportation Equipment]
“Volume is consistent. Our main customer is shifting production from U.S. plants to Mexico plants.” [Transportation Equipment]
ISM Mfr’g
Bond yields are falling off their early morning highs maybe in response to the print in job openings in July which were below expectations and with the downward revision to June. In July they totaled 7.27mm vs 7.18mm in June (revised down from 7.36mm).
Of particular note was the drop in the hiring rate to 3.2% from 3.4% and that matches the 2nd lowest print since 2011 not including immediately after the Covid shutdowns. The quit rate fell to 1.9% from 2%, matching the lowest since 2014, also not including Covid.
Job Openings
Hiring Rate
Quit Rate
