Analysts at Nordea Markets, point out that the ISM manufacturing index dropped less than expected, but the details were weaker than the headline index and suggest more manufacturing sector weakness in the near term.
Key Quotes:
“The numbers are weaker beneath the surface with the most forward-looking new orders index dropping to 50.0 in June from 52.7 in May, suggesting that the downward trend is likely to continue in the near term.”
“It is even more worrying that the drop in new orders stems from the domestic economy rather than from abroad as new export orders dropped much less than total new orders. The ratio of new orders-to-inventories suggest a lower production index in July.”
“Another cause for concern at the Fed is the prices paid component. Prices paid dropped to 47.9 in June from 53.2 in May, the lowest level since early 2016, despite rising oil prices during June. That could suggest slower momentum in inflation prints for June.”
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