Unless this Friday’s NFP number plummets, the taper is now assured. Moments ago the US joined the rest of the world in its “manufacturing renaissance” spurt reported over the past two months, with the Manufacturing ISM headline number rising from 55.4 to 55.7, beating expectations of a 54.0 print, and printing the highest number since April 2011 and the biggest beat since August 2011. The components which posted a notable increase were New Orders, which rose from 58.3 to 63.2, recording the largest 3 month rise in 4 years, Prices jumped the most or 5 from 49.0 to 54.0, while exports also rose by 2.0 to 55.5 as it appears everyone is exporting more to everyone else at the same time: hopefully someone is reminded that trade just happens to be a zero sum game. Among the decliners, the most notable one was Employment which dropped from 54.4 to 53.3, Production down 2.6 to 62.4, and Customer Inventories down 5 to 42.5. Maybe there is a reason why customers are rapidly destocking despite the the ramp up of production at the material stage.
From the report:
“The PMI™ registered 55.7 percent, an increase of 0.3 percentage point from July’s reading of 55.4 percent. August’s PMI™ reading, the highest of the year, indicates expansion in the manufacturing sector for the third consecutive month. The New Orders Index increased in August by 4.9 percentage points to 63.2 percent, and the Production Index decreased by 2.6 percentage points to 62.4 percent. The Employment Index registered 53.3 percent, a decrease of 1.1 percentage points compared to July’s reading of 54.4 percent. The Prices Index registered 54 percent, increasing 5 percentage points from July, indicating that overall raw materials prices increased when compared to last month. Comments from the panel range from slow to improving business conditions depending upon the industry.”
The August data breakdown:
What the respondents are saying:
- “Slight improvements in both domestic and international sales.” (Fabricated Metal Products)
- “Business is slowing down, not sure why — but we may end up below last year’s sales levels, whereas we had forecast 6.5 percent growth.” (Miscellaneous Manufacturing)
- “Material prices continue to be favorable; business is steady.” (Paper Products)
- “Slowing down slightly, but still stronger than last year by 20 percent.” (Furniture & Related Products)
- “Military slowdown affecting business.” (Computer & Electronic Products)
- “Summer seasonal businesses are doing well after a late start.” (Printing & Related Support Activities)
- “Still not seeing the year we had expected. Cautious about the balance of 2013.” (Machinery)
- “Tight government spending still affecting business.” (Transportation Equipment)
- “With improved weather outlook in the central states, agricultural prices are relaxing year over year.” (Food, Beverage & Tobacco Products)
- “We have benefitted from the Yen; seeing a 20 percent decrease in material costs from 2012 to 2013.” (Chemical Products)
And finally, the always curious list of commodities up and down in price:
Commodities Up in Price
- Corrugated Boxes (13); Corrugated Packaging (4); Lumber; Oil (2); Oil Based Products (2); Plastic Resin (2); Polypropylene (3); Steel — Cold Rolled; and Steel — Hot Rolled (2).
Commodities Down in Price
- Corn; Stainless Steel Surcharges; Steel (5); Sugar (4); and Sulfuric Acid.