James Smith, developed markets economist at ING, points out that the US ISM manufacturing survey with the reading of 52.1 is now at its lowest level since October 2016.
Key Quotes
“For a second month running, growth in new orders was pretty subdued, and this has translated into a sharp decline in backlogs of work.”
“Some of this can probably be explained by the strength in the dollar over the past year. More importantly, production appears to be stalling as firms look to run down elevated levels of stock.”
“The overall level of inventories has risen consistently over the past three quarters, which can be partly explained by businesses looking to stockpile components/finished goods ahead of planned tariff hikes (most notably before the start of 2019, when President Trump was initially expected to increase charges on $200 billion of Chinese imports).”
“All of this implies that manufacturing output is likely to stall over the next few months, which could potentially hit employment in the sector too.”
Share
