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Battle Scars: US Manufacturing PMI unexpectedly tanks in May, lowest since October 2016, as trade war rages

Jun 03, 2019

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  • US May ISM Manufacturing Index was 52.1, falling unexpectedly, trailing significantly consensus of 53, and down from 52.8 in April
    • Despite the drop, the index remain in expansion territory and respondents report “overall sentiment remains primarily positive
  • Analyst roundly agree the trade tensions with China are weighing on manufacturing in the US and these data are the result
  • Three of 5 components posted drops in the latest readings, including production dropping to 51.3, the lowest reading since May 2016
  • A separate manufacturing gauge, the HIS Markit US Manufacturing PMI, fell to 50.5 in May, it’s lowest level in over a decade
    • Weak clients demand drove the drop, respondents reported
  • The weak manufacturing reading comes on the same day IHS Markit Global PMI fell to 49.8 in May, below the expansion level of 50
  • The weak data in the US comes in the wake of similar readings around the globe
    • UK Manufacturing PMI dropped to 49.4 in May
    • China Manufacturing PMI dropped to 49.4 in May as well
    • South Korea Manufacturing PMI dropped to 48.4 in May 
  • Near term, developments in the trade war will drive sentiment-as most believe this could be protracted trade war with China, further drops in sentiment are possible
     

More on the trade war with China

 

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