Data released on Monday showed the US ISM Manufacturing Index dropped to 50.1 in February. Analysts at Wells Fargo, point out the ISM fell on the expansion side of the razor’s edge, but with key components posting sharp decline. According to them, the message in today’s report is virus-related difficulty just as the sector was beginning to stabilize.
Key Quotes:
“There were some signs that U.S. manufacturing activity was beginning to stabilize early this year as the risk of a further escalation in the trade war with China eased to an extent. The ISM manufacturing index slipped nearly a point in February, but at 50.1 remained in expansion territory and at a level noticeably higher than the second half of last year.”
“All bets are off now, however, with the spread of the newest coronavirus. There were plenty of signs in today’s report that factory shutdowns and transport bottlenecks out of China are already beginning to spill over into U.S. manufacturing activity. Among the five sub-indices that comprise the headline number, only supplier delivery times rose over the month.”
“Troubling the outlook beyond the possibility of supply disruptions, demand for manufacturing looks to have softened as well. Production was roughly unchanged, with the index falling four points to 50.3.”
“At 46.9, the employment index was little changed, but suggests manufacturing will be another modest drag on the headline in Friday’s nonfarm payroll report.”
Share
