Boockvar on Manufacturing PMI
From Peter Boockvar:
Manufacturing rebound continues but what now?
The S&P Global manufacturing PMI rose again to 55.7 from 55.1 and continues to be boosted by restocking of inventories. S&P Global said, “While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears. Supply delays grew more widespread in June.”
Also of note, “Most worrying was the further fall in employment, notably in the manufacturing sector. Factory job cuts are running at the highest since 2009 if the pandemic is excluded, reflecting concerns over the sustainability of the recent upturn in demand alongside worries over the escalating cost of raw materials.”
With pricing, “Although manufacturing input cost inflation moderated from May’s recent peak, it was the second highest for almost four years.” Prices charged were little changed m/o/m but at one year highs.
The service component does not include retail and wholesale trade nor construction which are key missing pieces of the US economy so we’ll rely on the ISM report next week instead.
This was the commentary on the outlook, and includes what they are seeing in the service categories they cover:
“Companies’ expectations for output in the year ahead improved in June to the brightest since February, lifting in both manufacturing and services. Improved outlooks were partly linked to hopes of an easing of war-related disruptions and price pressures. In both cases sentiment nonetheless remained well below long-run averages to point to historically subdued business confidence overall, often blamed on uncertainty over the economic outlook amid concerns relating to the ongoing impact of the war in the Middle East and government policies such as tariffs.”
Bottom line, the mixed and uneven economy continues on with the pockets of strength highly concentrated, as we know, in the AI data center construction and upper income spend, which is very dependent on the GenAI stock trade in turn lifting the indices. Also, as said here for months, the improvement in manufacturing is in part due to the front loading of orders and we’ll now see how it performs post Strait reopening.
US Manufacturing
