ISM manufacturing
- Prior report 46.4
- Prices paid 48.4 vs 43.9 expected. Last month 42.6
- Employment 48.5 vs 44.2 expected. Last month 44.4
- New orders 46.8 vs 47.3 prior
Manufacturing has been in a recession for some time but there are some green shoots. I suspect this survey is going to be a mess for the next few months because it looks like an autoworkers strike is coming.
Bonds are selling off on this report, in part because of the jump in prices paid. I don’t think that should have been a surprise given energy prices.
Comments in the ISM report:
- “Further reductions in customer orders due to the economic situation
and also their working down of own inventories. Backlog is dwindling,
but still showing robust revenue.” (Computer & Electronic Products) - “Demand still weak. Customer inventories are getting depleted;
however, we are not seeing a real uptick in demand. General supply
conditions are softening.” (Chemical Products) - “Still seeing a slowdown in orders. We’re continuing to ship to max
capacity, with supply constraints still a real part of our day-to-day
business operations.” (Transportation Equipment) - “Customer orders have softened. This is likely due to customers’
increased confidence in the supply chain, (which) has them reducing
their inventories. Customers are also being pinched with higher interest
rates. Additionally, consumers are feeling their purchasing power
eroded by stubbornly high inflation, so they are purchasing less.”
(Food, Beverage & Tobacco Products) - “Fourth quarter orders falling short of projection and indicating a
slowdown in customer demand, though the first quarter forecast remains
solid. Unclear if this is an inventory correction. Logistics stabilized
and costs are matching 2019. Shortages limited to only a few items now,
but suppliers are hesitant to add or replace labor needed in light of
slowing demand.” (Fabricated Metal Products) - “General slowdown in business at the end of the third quarter. For
capital equipment additions, our customers are buying only what they
need for specific jobs and not adding any capital fleet material for
potential future work.” (Machinery) - “There is additional softening in the market. Customers are hesitant
to provide extended forecasts with today’s economic uncertainty.”
(Electrical Equipment, Appliances & Components) - “Business continues to remain strong with sales and profits both
ahead of plan. The bookings were below what we planned, but that was
expected due to fewer working days and summer vacations.” (Miscellaneous
Manufacturing) - “The manufacturing sector continues to be slow, and the low market
prices make it difficult to stay profitable. On the positive side,
laborers are showing enthusiastic employment interest. Rising energy and
fuel prices are of concern to our company.” (Paper Products) - “Business is beginning to improve moderately. Still well below 2022
levels, but it appears that the ‘great inventory rebalancing’ is finally
coming to fruition.” (Plastics & Rubber Products) - “Automotive volume remains strong in preparation for the United Auto
Workers’ potential strike at Ford, General Motors and Stellantis.
Contingency plans in place for sub-tiers. Continue to have issues
recruiting general labor employees. Operational efficiency suffering due
to a lack of human resources. Order book remains strong and ahead of
2022.” (Primary Metals) - “(The Federal Reserve’s) actions to increase borrowing costs has
dampened demand for residential investment. Recently, this slowdown
plateaued somewhat, with demand stabilizing. The outlook for 2024
remains uncertain, and we continue to be cautious about building
inventories.” (Wood Products)
The inventories metric is an interesting one as it makes new lows: