In the latest affirmation of slower growth ahead, the ISM Manufacturing index, posted its largest one-month drop in a decade and, at 54.1, now sits at a level last seen the month of the 2016 election, explained analysts at Wells Fargo.
Key Quotes:
“While any print above 50 is consistent with expansion, the softening in the headline figure suggests a moderation in the pace of growth broadly and perhaps the end of an era of near-euphoria in the manufacturing sector more broadly.”
“Weaker readings were broad-based among the subcomponents.”
“Only two sub-indices rose over the month. Export orders edged up to 52.8, but barring the past two months of readings, are growing at the slowest pace since late 2016 as the global trading environment weakens.”
“The deterioration in business activity had been presaged somewhat by many of the regional Fed surveys, which gave up ground in December.”
“The plunge in the new orders sub index in December removes what was one of the few vestiges signaling that factory activity was holding up amid continued trade uncertainty and slowing growth in the United States and overseas.”
“Equipment spending in the GDP report tends to line up with core capital goods shipments, and here we are already seeing some weakening. Core capital goods shipments have fallen in three out of the past four months through November.”
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